Long Term Care
are in somewhat of a quandary in that if they are destitute
the government will pay for their long-term care. If you are
low income the government will pay some of the cost of your
long-term care. If however, you are in a high income the government
will not pay for any of your long-term care.
risk that a member of an elderly couple may require home or
facility care is significant Forty-three per cent of Canadians
aged 65 and older will spend some time in a long-term care
facility. The average length of stay is 2.8 years and 10%
will stay 5 years or longer. If the additional cost of care
is $100 daily or $36,000 annually, at a 30% marginal tax rate
the couple will require an extra $52,000 a year to fund the
LTC requirement. This could significantly reduce assets and
affect the lifestyle of the non-institutionalized partner.
care expenditures have increased 213% annually over the last
20 years. A private nursing home can cost between $3,000 and
$6,000 per month. Even with government subsidies, ward coverage
can cost up to $1,225 a month, depending on the province of
residence. Government nursing homes cost less, but have long
waiting lists. The occupancy rate in government certified
facilities in Ontario is 98.7%.
Care Insurance (LTC) is a recent innovation, prompted by the
enormous costs that can be associated with the health care
needs of the aged. It is anticipated that over the next decade,
the baby boom generation will purchase LTC insurance to provide
for their ageing parents.
with any other type of insurance, individuals should purchase
LTC coverage before age, disease, or incapacity limits their
ability to pass underwriting standards. Like all insurance,
the cost of LTC rises steeply with age, so the premium will
be more affordable if purchased early. The insured must be
between the ages of 40 and 80 at the time the policy is issued.
the claimant qualifies for benefits, coverage is for life.
Benefits may be payable either in the case of cognitive impairment
(i.e., the inability to think, perceive, reason or remember)
or if the claimant can no longer perform unaided two of the
five activities of daily living: bathing, eating, dressing,
toileting or transferring positions of the body.
choosing an LTC contract, be sure to know the answers to these
► Are facility and home care
benefits; reimbursement-based, indemnity -based, or fixed
► What is the method of calculating the benefit amount?
► Are calendar days or care days used to satisfy the elimination
► What activities of daily living are used to trigger payments?
► What care facilities alternatives are covered?
► What conditions will trigger payments?
► Are premiums guaranteed or
► Can premiums be paid for a limited period?
► Are there non-forfeiture
► Are additional benefits available?
► Is there a pre-existing limitation?
► What exclusions and limitations are included in the contract?
nature of the expense of long-term care insurance is such
that it does not qualify as an eligible medical expense. This
is not health care insurance and the premiums do not qualify
for the medical expense tax credit.
The information contained in this commentary is designed
to provide you with general information only, and is not intended
to be comprehensive advice applicable to the circumstances
of any individual. We strongly urge you to seek professional
assistance before acting upon information included herein.