Short Term Care Insurance (STCI) is an insurance plan that can help protect your financial future and is a lower cost alternative to long term care insurance.
An unexpected illness. An accident that leads to a need for a house health aide, a stay in a nursing home or assisted living center. That can happen to all of us. And unfortunately, not everyone is financially ready. How do you protect yourself from these things?
Short Term Care Insurance (STCI) is an insurance plan that can help protect your financial future and is a lower-cost alternative to long term care insurance. According to the US Department of Health Human Services, at least 7 out of 10 people who reach age 65 will use skilled or custodial care someday, and STCI is a perfect solution to these situations.
What’s the difference between STCI and long-term care insurance? STCI can only be in effect for one year or less. It is also known as Home Health Care Insurance or Recovery Insurance. Policyholders who purchase STCI naturally become eligible for benefits when they need assistance to perform two or more activities of daily living (ADLs), such as eating, bathing, and dressing.
For many people, STCI is just right. Most policies have a 0-day deductible (Elimination Period) and a full year of benefits. That means the policy pays you on the very first day of qualifying for benefits.
It is essential to know that these policies can pay in addition to Medicare, something traditional long-term care insurance policies are prohibited from doing. And you won’t need a comprehensive application, that is now commonly required to qualify for long-term care coverage, to sign up for STCI.
STCI policies provide a fixed level of daily benefits — around $140 per day is a typical amount that can vary based on the benefits — for a set time. Furthermore, with most policies, if the actual cost of care is less than the stated daily benefit, the remaining funds can be used to pay for care after the coverage time period has expired. To give an example, if the policy provides a daily benefit of $125 per day for 365 days, but the actual cost of care is $100 per day, the remaining $25 per day can be used to fund care on day 366 and beyond.