Long-term care insurance are plans that most closely relate to the needs of assisted living facility residents. They can be obtained through group insurance policies obtained through employment or as individual policies available to people who may not have this insurance available from their employer. Policies generally provide a set daily benefits limit, often between $100 and $150, as well as a total benefits limit, such as $200,000 over the lifetime of the policy. There is no minimum or maximum age, however the value of monthly premiums may be affected by both age and the time that an insured person has been paying into the plan.
Long-term care insurance covers aspects of healthcare and assistance that are not covered by Medicare or other health insurance plans. This can include the costs of home health aides and assistance with "activities of daily living" including help with bathing, dressing or other necessary daily activities. The principal difference between this and other policies is that intermediate care, that not provided by licensed medical practitioners, is also covered.
This is also known as "alternate care" which is a term that describes aid that can be used as an intervention for seniors who may not be able to live independently, but do not wish to live in the more structure of a skilled nursing facility. Note that the total benefit of these policies may not be used towards assisted living facilities; there may be a cap that mandates that only a certain percentage is used for alternate care.
Long-term care plans are similar to other insurance options provided by private health insurers. Therefore, pre-existing conditions can impact care. Similar to group health insurance policies, premiums may be higher for adults who have debilitating conditions before they apply for a policy. More importantly, riders or temporary exclusions on care provided may mean that long-term care insurance is not available to
The other key factor is that disabilities or conditions caused as a result of a mental disorders or substance abuse may not be covered. This is similar to group health insurance policies that have differing conditions for addiction and mental health counseling. However, keep in mind that these factors may be limited if long-term care insurance is purchased prior to these kinds of diagnoses.
Anyone who is at least 18 years old can buy long-term care insurance, and most policies are available well into one's retirement years. As with health insurance, premiums increase with both age and diagnosed medical conditions. That means that people who are considering augmenting their retirement financial capabilities with long-term care insurance should speak with a financial adviser or a healthcare professional prior to any major life events.
Just like health insurance, too, full disclosure is critical. The advantage of new policies is that there is generally a smaller gap between the beginning of a stay in an assisted living facility or receiving home health assistance that once could last 90 days or more. At the same time, rescission is still a possibility. That is the rescinding of benefits because the long-term care insurance holder had not disclosed medical conditions prior to applying for the policy. And just like the 61-day gap in health insurance where some conditions can lead to the insurer not providing coverage, gaps in long-term care insurance for those wishing to change plans can affect their ability to receive benefits.
If a policy holder remains healthy and is able to live independently, there are clauses available that return a portion of the total premiums paid. This means that if no long-term care is necessary, a percentage of the premiums paid are returned as a cash benefit. It also helps family members and spouses if the maximum benefits are not accrued during your lifetime. Be sure to check that these "non-forfeiture benefits" are listed in the policy description if you feel that you need them in the future.
Also be sure to note whether or not you can receive a portion of your premiums back, and what provisions are in place for so-called revolving coverage, where multiple stays may be covered.
As people age, the premiums for their long-term care insurance also rise, because according to actuarial tables, they are more likely to need assistance to continue with their desired standard of living. Many plans, however, have options for those who may not be able to continue paying those higher rates.
For example, a plan may offer reduced benefits, such as a drop from $150 per day to $100 per day while continuing the same monthly premiums paid for by the insured. Others are contingent on the size of the rate increase. For example, if premiums are set to increase by 50 percent, you may be able to switch to a policy with the same insurer that cuts maximum coverage from five years to four years, or something in that vein.
Note that you also may not be required to continue paying premiums if you are in a nursing home or assisted living facility or receiving home healthcare assistance. Again, these depend on the plan, and are usually listed under "waiver of premium" sections.
The average assisted costs varies both on the state of residence and the abilities of the resident. On average, however, most per diem costs range from $50 to $125, and nursing home facilities cost much more than that. Averaging that to a monthly basis, those costs are between $2,000 and $3,000, again depending on the cost of living as well as services needed.
Long-term care insurance helps to defray these costs up to both the daily and maximum benefits afforded by the policy. An example policy might pay up to $75 per day and offer $150,000 in total benefits. If the cost to live at an assisted living facility was $100 per day, the insured would be required to pay $25 per day, and be able to live there for up to 2,000 days, or more than five and a half years.
Other policies may offer revolving benefits: if a resident only needs assistance for a short-term, they may be eligible to return if they suffer a more debilitating condition in the future. Generally, a short-term gap in benefits, either six months or one year, may be necessary before the long-term care insurance again begins paying benefits.
Like Medicare's regulations, there are best practices in looking for long-term care insurance. In fact, state insurance commissioners have agreed on the minimum coverage and services that LTC insurance providers should provide to seniors or those considering their retirement finances.
For example, custodial care and intermediate care benefits should be available, and a policy should cover at least one year of nursing home care, as well as the specialized care for those at risk of developing Alzheimer's disease.
Like other insurance options, the statement of benefits and exclusions should be easy to understand, and any restrictions on the benefits should be written in plain English. That includes the window between the need to move to an assisted living facility or a nursing home, which should be minimal.
And finally, there should be a 30-day refund policy, as well as guarantees that coverage cannot be terminated if the policy holder's condition worsens. It should also not require that the insured receive nursing home care before intermediate care or the assistance of home health aides.
While long-term care insurance is the type of healthcare policy that most directly relates to residents of assisted living facilities, it may not be the only answer. For example, while seniors generally qualify for Medicare Part A hospital care and Medicare Part B outpatient care, it may make sense for those with certain medical conditions to consider either Medicare supplemental insurance or Medicare Advantage private insurance plans that offer additional benefits. AssistedLivingFacilities.org has guides to these types of insurance.
Note, too, that retirement investment plans may help to augment the money that can be used for loved ones moving into these facilities. A complete insurance and investment plan may require a small LTC insurance policy to offset the volatility of a 401K or other investments. The converse is also possible: older Americans are working longer, and may find it easier to pay monthly premiums for insurance rather than creating a long-term retirement investment plan.