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What You Need to Know About Long-Term Care Insurance


Alissa Sauer

Nearly 70% of adults over the age of 65 will require some kind of long-term care services in their lifetime. Long-term care costs can be exceedingly expensive. In fact, a 2017 Genworth study found that the national median of an assisted living community in 2017 was $3,750 per month. The national median cost of a nursing home was much higher at $7,418 per month for a private room. So, how are families expected to pay for these necessary but often too expensive care options? One way many seniors are choosing to cover long-term care costs is through long-term insurance plans.

Learn more about long-term care insurance, when to consider purchasing your plan, what your plan can cover, and the benefits of having a policy before care is needed.

Long-Term Care Insurance for Seniors 

According to the AARP, “long-term care” refers to the assistance that people who are living with a chronic illness or disability receive on a daily basis over an extended period of time. This type of care can include assistance with activities of daily living, like bathing, dressing, and eating, to more skilled care services provided by nurses, therapists, or other medical professionals.

Most employer-based health insurance plans do not cover long-term care and Medicare will only cover short-term stays in a nursing home, or limited care, under very strict requirements. Long-term care insurance can help people pay for long-term care in an assisted living community or a nursing home, and under some policies, may cover the costs of adult day care or home modifications and other services.

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Is Long-Term Care Insurance Right for Your Family?

When considering if long-term care insurance is right for yourself and your family, there are a wide range of factors to consider. How much will the plan cost? What is the likelihood that you will need the plan? And, if you do end up purchasing a policy, when should you get it? Because long-term care insurance can be costly and plans are not standardized, you will want to be sure that you are making the right choice – and that it’s purchased at the right time. Premiums for long-term care insurance policies average $2,700 per year. Examine these six factors before deciding if long-term care insurance is the right decision for you.

1. Age and health

Because your age and health have a huge impact on the cost of your policy, consider the timing of your plan purchase. The younger and healthier you are, the less expensive your plan will be.

2. Waiting or Elimination Period

It’s important to note that most policies will include a waiting or elimination period before the insurance company will pay for care. Usually, you will be able to choose a policy ranging from a 0 day to a 100 day waiting period. The shorter the waiting period, the more expensive the plan will be. Also, be aware that some policies may induce the waiting period with every new care plan or illness. Try and choose a plan that only makes you fulfill that period one time.

3. Income

Can you afford long-term care insurance or is Medicaid a better option? Medicaid can cover care in a nursing home and in some states, it will cover a limited amount of in-home care. But, to qualify for Medicaid an individual must exhaust all resources and meet other eligibility requirements. A financial advisor or elder care lawyer can take an in-depth look at your personal finances to help you better understand your care options.

4. Your Friends and Family

Do you have people who will help you if long-term care becomes necessary? Consider how much help you are willing to ask of them and what you can reasonably expect from your support network.

5. Future Costs

Because premiums often increase over time and income typically decreases, it is not uncommon for people to become unable to pay the premiums. Before committing to long-term care insurance, be sure that you will be able to meet premium payments as they may rise.

6. Daily and Lifetime Maximums

Most policies have a daily maximum benefit and may also limit benefits for a certain period of time. For example, a policy may pay up to $200 per day and no more than 70% of the total bill. Lifetime limits may also be imposed.

Services Long-Term Care Insurance Plans Typically Cover

Some insurance companies may place certain qualifications including licensure when securing care. You will want to read through your plan carefully to ensure that your policy covers the type of facilities, programs, and services available in your geographical area. While every policy is different, most long-term insurance policies cover these senior care services

  • Nursing home
  • Assisted living
  • Adult day care services
  • Home care
  • Home modifications
  • Care coordination
  • Future service options to cover a new type of long-term care service that may become available after the plan is purchased

5 Benefits of Long-Term Care Insurance

1. Peace of mind

As with most insurance plans, the biggest benefit of having long-term care insurance is the peace of mind that it buys. With a long-term care insurance policy that is well researched and well-timed, the insured and his or her family can have peace of mind knowing that future long-term care needs will be financially covered.

2. Tax benefits

According to the IRS, long-term care insurance is treated like health insurance in that the dollar amounts the policyholder receives for care are generally excluded from income and the premiums paid are typically tax deductible.

3. Increased likelihood of aging in place

Because long-term care insurance usually covers home modifications, the policyholder is more likely to remain in his or her home for a longer period of time.

4. Increased ability to pay for quality care

Long-term care insurance is a great way for people who anticipate needing long-term care to ensure he or she will be able to afford care if care becomes necessary.

5. Reduction in financial and psychological stress

This is true not only for the policyholder but also the policyholder’s family member. Because long-term care insurance allows people to pay for professional care, the family does not have to bear the burden of finding care or becoming caregivers themselves.

Do you have long-term care insurance? Why did you decide to purchase a policy? Share your experiences and thoughts with us in the comments below.

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