Long Term Care Insurance

Relatively new to Canada, but catching on quickly, this is an insurance policy which pays its benefits to help keep you in your own home or to provide for you in an assisted residence when your doctor decides you need help with daily living chores. Not a lot of companies are yet providing long term care insurance but it is something we recommend that all our clients look into. It doesn’t take much reading of a newspaper to realize that our governments are not going to be providing very much benefit along this line, relative to the need. Less and less as time passes.

A typical policy would provide, say, up to $100 daily to offset the cost of various services such as nursing assistance, meals on wheels, housekeeping, in your own home. This could be a lifetime benefit or have a maximum period of, say, two years. It would also provide the same benefit amount toward the cost of maintaining you in a nursing home or a retirement facility where full-time nursing staff is in attendance. The claim trigger is your own doctor ordering this type of care for you. Most policies state that you must be unable to perform at least two of the activities of daily living (ADL’s), which are walking, bathing, transferring (bed to chair etc), dressing, toileting, eating, and maintaining continence. And most cover cognitive impairment, such as caused by Alzheimer’s.

Facility care is generally considered to be a nursing home rather than a retirement home as such. But it could include a retirement facility if full time nursing staff is included. Certainly it could include home care benefits such as extra nursing supervision whilst living in a retirement center. Likewise home care is not necessarily care at home but rather care that allows you to continue living at home. It could include adult day care, respite care, hospice care, and in some cases reimbursement for durable medical equipment.

Facilities are getting better as time passes but government-funded long term care facilities are overcrowded. And agencies that provide government-funded home care have long waiting lists. While provincial governments are making this problem a priority, there is a waiting list for long term care beds and, particularly, for home care assistance subsidized by government. In Ontario the Access Centres restrict the home care aid available on a strictly rationed basis, a very few hours weekly in most cases, which is all they have funding for. If you want more you can get it but you have to pay for it.

Private services are a bit more available but they cost full price with no subsidy from the government. How are you planning to come up with the money if you need help? Or if your spouse does? Or your parents? How will you feel as your house disintegrates around you because you can’t look after it, can’t afford to look after it, as all your money is being used to maintain you in your home?

If you have spent your working life in a reasonably nice house and have enjoyed a pleasant lifestyle, how will it feel if you have to share a room with four other people for the rest of your life? Think about it. Think about your son or daughter, or daughter-in-law, having to give you a bath or change your diapers, just because you can’t afford a decent nursing home. Or quality help at your own home. Not nice.

If you can afford to pay these costs yourself, probably you don’t need the insurance. Even if you can, the insurance policy is still probably a better investment. But if you can’t afford it, or it will severely affect your estate planning to afford the care costs, you should look seriously at paying a premium to lay the risk off to an insurance company. The premiums are expensive but not nearly as expensive as paying for the care yourself. You can factor in a return of premium option so that, if you don’t make a claim on the policy, your heirs can have most or all of your money back. This way you get value either way -- a claim paid or your money back.

You can tailor a policy to your family’s needs. You can have an elimination period (ie deductible) ranging from 0 days to 90 days. 90 days is probably the best value if you can self-fund the first 90 days. Benefit periods range from one year to lifetime. Lifetime is probably what you should select. If you have been in a nice place for, say, two years, do you really want to be moved to an inferior nursing home just because the policy ran out?