Search for Assisted Living by ZIP Code:  :

Long Term Care Insurance
What is Long Term Care Insurance & What Does it Cover?

What LTC Insurance Pays
What LTC Insurance Pays

Long Term Care Insurance or LTC insurance is an insurance product designed to help pay for costs of long-term care not covered by health insurance, Medicare, or Medicaid.

A tough question for most people, "Should I buy it?" There is a variety of perspectives to take when answering the loaded question. One perspective; long-term care insurance is expensive, retirees face a small chance that long-term care needs and costs could eat up savings in a short amount of time.

If a person decides against investing in a long-term care insurance policy, alternatives are to reserve a large sum of money like a savings account slotted to cover such expenses. Another choice is to use home equity, rely on family, friends or government assistance.

As the population continues to age, and future retirees have fewer children to depend on, long-term-care needs represent an important societal issue. Costs for care continue to rise faster than inflation due to a shortage of caregivers. A person's choice of whether to invest in a long-term care insurance policy is strictly personal. This article equips you with knowledge of what it is and the factors used to determine costs and ways a person can use the funds.

In a nutshell, long-term care insurance addresses an individual's need for care, on the ability to perform the essential activities of daily living. These activities are dressing, bathing, eating, toileting, continence, transferring (getting in and out of a bed or chair), and walking.

The facts: Studies show that sixty (60) percent of people over 65 years of age require at least some type of long-term care services during their lifetime. About forty (40) percent of individuals who receive long-term care are between the ages of 18 and 64.

What does Long Term Care Insurance Cover?

It covers home care and home health care services, assisted living, adult day care, respite care, hospice care, nursing home and Alzheimer's facilities. Not all long-term care insurance policies cover all services, nor do they all pay the same for similar services.

Home Care Services

Home care services covered by long-term care insurance usually include homemaking and companionship to meal preparation and medication reminders. They also include personal care services and the ones that help with the activities of daily living like bathing, dressing, and grooming.

Depending on the policy, there is a waiting period before accessing long-term care funds. It is important to ask questions and get advice from an insurance broker when deciding on a policy. Will the plan begin paying benefits on the day your care needs and assistance begin, or is there a waiting period? If so, what is the waiting period?

Assisted Living

As you age, you may require more assistance and choose to live in an assisted living facility. Features and benefits when paying for assisted living vary by the insurance company and by the policy. Know the type of services you want or need determines the best type of policy and the insurance company to choose.

Remember that some long-term care insurance policies stipulate paying for assisted living and determined on a person's ability to perform two or more "activities of daily living." Some insurers may ask for a physician evaluation of the insurance company's choice, not yours to see if your condition qualifies for coverage

A "facility-only" policy covers care received in a licensed assisted living facility or skilled nursing facility, but not care in an unlicensed facility or your home. Better to get an integrated home care policy with 100% protection for care received either at a licensed assisted living facility or skilled nursing facility or an unlicensed setting, like your home.

Hospice Care

In some cases, hospice care is available but the policy must include a hospice benefit. If you are unable to pay for hospice and palliative care services, most hospice organizations provide care using funds raised from community donations and charitable foundations.

Nursing Homes and Alzheimer's Care

Nursing home care and memory care is available and paid by long-term care insurance but with stipulations. Some vary in the terms the policy, when will benefits pick up costs of care, the time (how long) one needs care and many more. Before you buy, be very wary and know what you're getting. Follow these steps:

What does Long Term Care Insurance Not Cover?

What long-term care covers

Long-term care insurance can exclude-completely or for a limited time some conditions:

Pre-existing Conditions

Illness or disability that a person received medical advice or treatment six months before applying for long-term care insurance. The coverage may exclude that condition for up to six months after the policy's date of entry into force.

Mental health and nervous disorders

Some policies exclude mental health and nervous disorders. In most cases, Alzheimer's disease and other age-related disorders are available. However, a company can deny coverage to a person diagnosed with Alzheimer's disease.

Care Given by Members of Family

Most long-term care policies do not pay family members to give attention to the person receiving benefits. However, insurance care companies pay for training the family member.

The Treatment Outside the U. S.

Care treatment performed outside of the United States - but some policies offer an International Care benefit

Care as a result of war or a suicide attempt

Additional exclusions-coverage for certain conditions resulting from alcoholism and drug addiction, a commission of a felony, or intentionally self-inflicted injuries.

Always consult with a long-term care insurance agent for details.

Reasons Why an Individual may not Qualify for Buy LTC Insurance

Below are some reasons that might prevent a person from purchasing a long-term care insurance policy:

  • Currently uses long-term care services
  • Now needs help with Activities of Daily Living (ADL)
  • Currently has AIDS or AIDS-Related Complex (ARC)
  • Currently has Alzheimer's disease or a form of dementia or cognitive dysfunction
  • Currently has a progressive neurological condition like multiple sclerosis or Parkinson's disease
  • Suffered a stroke within the past year to two or has a history of strokes
  • Currently has metastatic cancer

How are Long Term Care Insurance Rates Determined?

These factors determine the rates of a LTC insurance policy:

  • The age of the person
  • The daily (or monthly) benefit, the pay out
  • 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.
  • The end of life of the policy
  • Inflation protection
  • The health rating of the person (preferred, standard, sub-standard)

Most companies offer couples and multi-life discounts on individual policies. Some companies define "couples" not only to spouses, but also to two people who meet criteria for living together in a committed relationship and sharing basic living expenses. The average age of purchasers has dropped from 68 years in 1990 to 61 years in 2005, and the number of purchasers who are under age 65 has increased significantly

What to Know Before Buying a Long-Term Policy

  • Be aware that the insurance company may raise the premium on your policy. Request information from the company their premium rate history.
  • Know the limits. Ask how long or how much the policy pays. Some pay the costs for two to five years, while other insurance companies offer policies that pay long-term care costs for as long as you live-no matter how much it costs.
  • Comparison shop among several policies
  • Checking for exclusions and limitations
  • Don't base the decision solely on advice from an insurance agent or broker who is trying to sell you a policy
  • Check the latest analysis of LTC policies by Consumer Reports, a consumer information magazine that regularly does comprehensive studies and comparisons of particular policies.

Become Informed and Shop Around

Comparison shop among several policies and be sure to check for exclusions and limitations. Don't base the decision solely on advice from an insurance agent or broker who is trying to sell you a policy. Check the latest analysis of LTC policies by Consumer Reports, a consumer information magazine that regularly does comprehensive studies and comparisons of particular policies.

Should You Buy Long Term Care Insurance?

Long term care is very expensive and often times can wipe out a lifetime's savings. Long term care insurance companies capitalize on that fear and market the product to target protection against the costs of long-term care, specifically residential nursing home facilities. However, it is very expensive, and it often provides limited benefits -- with restrictions and conditions. In these cases the benefits pay only a small percentage or nothing at all, of your total long-term care costs.

Know the odds. The actual odds of a long nursing home stay are lower than the insurance industry would like you to believe. In addition, being protected by Medicaid laws, there is virtually no risk of being thrown out of a nursing facility and into the street. Unless, of course, Medicaid laws change or goes broke.

People with assets worth $300,000 to $500,000 above and beyond the value of their homes -- for whom LTC insurance is a sound idea, especially when viewed as a safety net rather than as a financial investment.

Also, make sure to find out if your policy includes coverage for assisted living facilities.

Carol Marak
Carol Marak

After seven years of helping her aging parents, Carol Marak has become a dedicated senior care writer. Since 2007, she has been doing the research to find answers to common concerns: housing, aging and health, staying safe and independent, and planning long-term.