It can happen to anyone – an expected illness or accident that required a home health aide, a stay at a nursing home or assisted living facility. But, are you prepared financially for something like this? Do you have the necessary coverage to protect you and your family financially?
Why are short-term care policies important for those on Medicare?
Short-term care policies, also known as recovery or post-hospitalization insurance, play a vital role in supplementing Medicare coverage, particularly when individuals need care for a limited period after an illness, injury, or surgery.
Here's why they are important:
- Filling Medicare's gaps
- Skilled nursing facility (SNF) care: Medicare Part A provides limited coverage for SNF care, covering 100% of the first 20 days and requiring a daily copayment for days 21-100 ($209.50/day in 2025, but covered by most Medigap plans (Plan G/N), but NOT many Medicare Advantage Plans). The National Council on Aging (NCOA) notes that patients are responsible for the entire cost after 100 days. Short-term care insurance can cover these copayments and potentially extend coverage beyond 100 days if needed.
- In-Home Care: While Medicare covers some home health services, it generally doesn't cover non-skilled personal care (like bathing and dressing) if that's the only care needed. Short-term care insurance can help cover these personal care services, allowing individuals to recover in the comfort of their own homes.
- Covering Rehabilitation and Recovery
- Focus on Recovery: Short-term care policies focus on providing temporary support for individuals recovering from surgery, injury, or illness. This can involve rehabilitation therapies like physical, occupational, and speech therapy, with the goal of restoring independence and enabling individuals to return home as quickly and safely as possible.
- Intensive rehabilitation: Short-term care can provide access to specialized therapies and medical services to accelerate recovery after a medical event.
- Bridging the gap between acute and long-term care
- Long-Term Care (LTC) elimination periods: Many long-term care insurance policies have an elimination period, typically 90 days, where the policyholder must pay for care out of pocket before benefits begin. Short-term care insurance can bridge this gap by covering the costs during this elimination period.
- Transition from Hospital to Home: Short-term care can provide a smooth transition from a hospital discharge to home, ensuring continuity of care and reducing the risk of complications or readmission.
- Affordability and Accessibility
- Lower Premiums: Short-term care policies generally have lower premiums compared to long-term care insurance, making them a more affordable option for many individuals.
- Easier Qualification: Short-term care policies often have less stringent underwriting requirements and a simpler application process, making them more accessible to individuals who may not qualify for long-term care insurance due to age or existing health conditions.
- Immediate Coverage: Many short-term care insurance plans offer coverage with a 0-day deductible or elimination period, meaning benefits can begin as soon as care is needed.
- Other Benefits
- Respite care for caregivers: Short-term care can offer respite for primary caregivers, giving them a much-needed break from caregiving responsibilities.
- Protecting Retirement Savings: Unexpected healthcare expenses, even for a short period, can quickly deplete savings. Short-term care insurance can help protect financial assets by covering these costs.
- Flexibility: Short-term care policies can be tailored to individual needs and preferences regarding the level and duration of coverage.
In conclusion, for Medicare beneficiaries, short-term care policies are valuable for filling coverage gaps, supporting rehabilitation and recovery, bridging the elimination period of long-term care insurance, and providing a more affordable and accessible option for short-term care needs. Understanding the benefits and limitations of these policies can help individuals and families make informed decisions about their healthcare planning
It is important to know that these policies can pay in addition to Medicare—something a traditional long-term care insurance policy is prohibited from doing. Also, insurance companies generally don’t require the same comprehensive applications that are now commonly required to qualify for long-term care coverage.
The policies typically provide for a fixed level of daily benefits—around $140 per day is common (this can vary based on the benefits)—for a set time. However, 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. For 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.
Is STCI Right for You?
In general, STCI is worth considering for those who can’t afford or don’t qualify for traditional long-term care insurance policies. Since many illnesses that require some time in a nursing home or home health care (common services that are covered by STCI) are usually resolved within a one-year period, it is definitely worth consider STCI.
While long-term care insurance may provide the most comprehensive level, the cost can be prohibitive—and, in many cases, STCI can cover the actual cost of care much more efficiently at a lower cost than a traditional LTCI policy.