Long Term Care Insurance

Unlike traditional health insurance, long-term care insurance is designed to cover long-term services and supports, including personal and custodial care in a variety of settings such as your home, a community organization, or other facility.

What is it?

Long term care insurance policies reimburse policyholders a daily amount (up to a pre-selected limit) for services to assist them with activities of daily living such as bathing, dressing, or eating.  You can select a range of care options and benefits that allow you to get the services you need, where you need them.

The cost of your long term care policy is based on:

  • How old you are when you buy the policy
  • The maximum amount that a policy will pay per day
  • The maximum number of days (years) that a policy will pay
  • The maximum amount per day times the number of days determines the lifetime maximum amount that the policy will pay.
  • Any optional benefits you choose, such as benefits that increase with inflation

If you are in poor health or already receiving long term care services, you may not qualify for long term care insurance as most individual policies require medical underwriting. In some cases, you may be able to buy a limited amount of coverage, or coverage at a higher “non-standard” rate.  Some group policies do not require any underwriting.

What does it cover?

Most policies sold today are comprehensive. They typically allow you to use your daily benefit in a variety of settings, including:

  • Your home
  • Adult day service centers
  • Hospice care
  • Respite care
  • Assisted living facilities (also called residential care facilities or alternate care facilities)
  • Alzheimer’s special care facilities
  • Nursing homes

In the home setting, comprehensive polices generally cover these services:

  • Skilled nursing care
  • Occupational, speech, physical, and rehabilitation therapy
  • Help with personal care, such as bathing and dressing

Buying Long Term Care Insurance

People with certain conditions may not qualify for long term care insurance. Since standards vary between different insurance companies, if one company denies you, it is possible that another company will accept you. Common reasons why you might not be able to buy long term care insurance include:

  • You currently use long term care services
  • You already need help with Activities of Daily Living (ADL)
  • You have AIDS or AIDS-Related Complex (ARC)
  • You have Alzheimer’s Disease or any form of dementia or cognitive dysfunction
  • You have a progressive neurological condition such as multiple sclerosis or Parkinson’s Disease
  • You had a stroke within the past year to two years or a history of strokes
  • You have metastatic cancer (cancer that has spread beyond its original site)

Insurance companies also consider other health conditions when determining your eligibility. If you buy your long term care insurance before you develop one of the health conditions listed above, then your policy will cover the care you need for that condition.

Before You Buy

You should consider a number of things before purchasing Long Term Care insurance:

  • Don’t buy more insurance than you think you may need. You may have enough income to pay a portion of your care costs and you may only need a small policy for the remainder. You also may have family members willing and able to supplement your care needs
  • Don’t buy too little insurance. That will only delay the use of your own assets or income to pay for care. Think about how you feel about having care costs that are not covered. While you can usually decrease your coverage, it is more difficult to increase coverage, especially if your health has declined
  • Look carefully at each policy. There is no “one-size-fits-all” policy
  • If you choose a policy that only pays for room and board in a facility, plan for other expenses, such as supplies, medications, linens, and other items and services that your policy may not cover
  • It costs less to buy coverage when you are younger. The average age of people buying long-term care insurance today is about 60. The average age of those purchasing policies offered at work is about 50
  • Make sure that you can afford the long term care insurance policy over time, as your monthly income may change
  • Research and consider different options and talk with a professional before finalizing your decision
  • Don’t feel pressured into making a decision

How Do I Apply?

Most people buy long term care insurance directly from an insurance agent, a financial planner, or a broker. Some important points:

  • States regulate which companies can sell long term care insurance
  • States regulate the products that companies can sell
  • There are more than 100 companies offering long term care insurance nationally, but 15 to 20 insurers sell most policies
  • The best way to find out which insurance companies offer long term care coverage in your state is to contact your state’s Department of Insurance
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