5 things to know about long-term care insurance

You’re healthy now, and that’s great news. But what would happen if you developed a severe and disabling condition, a degenerative illness or dementia? You may find you need constant care, either at home or in a nursing home. And that’s not great news – especially if you have trouble paying for that care.

How will your need for care affect your family? If you or someone you know has ever provided care for a loved one, you’ll appreciate why it’s important to plan for your own future health-care needs. Supporting an aging family member can take its toll emotionally, financially and physically.

Many Canadians are feeling the pinch. A survey¹ shows over a third of Canadians (37%) providing long-term care for a loved one at home feel “angry, depressed, distressed or unable to cope.” If this happens to you, you may have to change or consider changing your retirement plans.

When it’s time to move your parent into a nursing home, who pays for home healthcare?

Long-term care is expensive. In Ontario, for example, a subsidized, semi-private bed in a long-term care facility can cost $2,336.92 a month. ² In Quebec, it’s $1,686.90 for a similar room; in Alberta, it’s $1,947. In New Brunswick, expect to pay a whopping $3,390 per month. Getting care at home is even more expensive, as it’s not subsidized like nursing homes.

If you need financial help, the province will step in. In Ontario, for example, you sign over your entire government pension (CPP, OAS, GIS). Essentially, you surrender control of your finances, except a small “comfort allowance.” That’s a little pocket money the government gives you for clothing, telephone, cable, etc. (It’s currently $149/month.) Then the province tops up the difference – but only up to the lowest room cost.

Living in a retirement residence will cost considerably more, as those fees aren’t provincially capped. Your province may fund a limited amount of home care, but if you need more, you pay for it. And at-home personal care can cost up to $65/hour.

All told, if you need extensive care, your annual out-of-pocket costs could easily reach between $35,000 and $65,000.³

So, how can you ensure you have the funds to help pay for care when you need it? If you haven’t planned ahead, your options might be limited to:

• • • using up your retirement savings
    • borrowing money
    • asking your children or other loved ones for money
    • selling your home

Or, you could plan ahead and buy long-term care insurance.

Here’s what you need to know before you buy:

Long-term care insurance protects your finances if the following prevents you from looking after yourself:

• • • a physical illness, or
    • you become dependent on someone for your basic care need for an extended period.

The money from long-term care insurance can help pay for care:

• • • in your own home
    • at an adult day-care program
    • in an assisted-living or long-term care facility.

These programs and facilities provide services such as nursing care, personal care, meals and housekeeping, and having someone watch over you.

You can buy benefit amounts from $125 to $2,300 per week.

It’s a two-step process. First, your coverage must take effect. That could be at age 65, or after five years, whichever is the longer period. You can submit a claim for benefits after your coverage becomes effective.

Second, once coverage is effective, you must remain dependent for your policy’s waiting period (one or two years), before you start getting benefits.

Long-term care insurance is part of a variety of protection plans from life insurance companies.

With long-term care insurance, you have more flexibility and control. And that’s really great news.