What is Long Term Care Insurance?

Long-term care insurance helps pay for the often astronomical costs of long-term care for people with chronic disabilities. It includes custodial care — assistance with daily living activities like eating, showering, and getting dressed — in either a nursing home, assisted living facility, or in the patient’s own home.

With most people living longer now, the demand for long-term care insurance will likely become more apparent. For example, government statistics indicate that 70 percent of Americans aged 65+ will eventually need some long-term care.

Today, the average cost for a year in a nursing home is a staggering $89,292 for a semi-private room and $100,380 for a private room. 

Home health care costs are also exceptionally high — home health care services provided just three days a week can cost around $20,000 a year.

Long-term care is not usually covered by regular medical insurance. 

For instance, these do not provide long-term-care coverage:

• Employee Group Health and Medical Plans provide minimal long-term care coverage.
• Medicare provides limited nursing home and home health care coverage. Learn more at Medicare.gov.
• Medigap fills in the gaps left by Medicare and does not extend coverage for long-term care beyond Medicare limits. Learn more at Medicare.gov.
• And Medicaid requires individuals to spend almost all of their savings and assets before becoming eligible for nursing home coverage. Learn more at Medicaid.gov.

In some cases, the premiums for long-term care insurance may be deductible for income tax purposes, which is an added benefit.

Long-term care insurance is a somewhat new form of insurance coverage. Resulting in policies varying considerably in cost and benefits. This can make it difficult to compare policies and ultimately make an informed choice; therefore, consider consulting with a professional at National Educational Services to help you sort through the options.

WHO SHOULD CONSIDER LONG-TERM CARE INSURANCE?

Long-term care insurance may be a solution for you if:

• • You are concerned about protecting your assets and maintaining your financial independence.
  • You do not want to depend on your family to care for you, and you need to enter a nursing home or assisted living facility.
  • You want to try to stay in your home should you require long-term care.
  • You can afford the premiums for long-term care insurance.
  • You meet policy restrictions, such as pre-existing medical conditions exclusions and waiting periods.

Important Long Term Care Insurance Features, Coverage, and Rates

Here are a few Long-Term Care insurance policy features to consider:

• Guaranteed Renewable ensures that you will be able to continue your coverage without undergoing additional medical exams.
• Flexible Benefit Triggers cause the insurance company to start paying benefits. Your policy benefits should only be triggered if you need assistance to perform at least two of the activities of daily living (ADL), which include bathing, dressing, eating, using the toilet, continence, transferring (for example, moving from a chair to a bed) and taking medication. Another trigger should be “cognitive impairment,” which means coverage applies if you are mentally impaired, even if you are physically able to care for yourself.
• Home Health Care Coverage ensures your policy pays benefits for care at home and in a nursing home or assisted living facility. Policies that only settle for institutional care may force you to be institutionalized to receive benefits.
• Broad Classification of Nursing Home Care is provided for any nursing home — skilled, intermediate care, respite, or custodial care.
• Inflation Rider will increase your daily benefit to keep pace with inflation. This feature protects you against the rising cost of long-term care but can be costly.
• Company Rating ensures the insurance company is highly rated. It is stable and financially healthy to pay your benefits when you need them most.

Coverage levels: Daily benefits of a long-term care insurance policy typically range between $30 to $200. How much you need depends on nursing homes and home health care costs in your area and how much you can devote from other sources, like your savings and investments.

Rates: Policy rates are generally affected by several factors, including your age, benefit amount, waiting period until the first benefit payment, and other policy features.