Long-Term-Care Insurance

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KEY POINTS

• Long-term-care (LTC) insurance can help pay for care in a nursing facility, in-home services, and adult day care programs.
• Health insurance does not pay for long-term stays at nursing facilities. They pay for medical care, not day-to-day personal care or room and board.
• The cost of LTC insurance depend on how old you are and your health when you buy the policy. Most LTC insurance policies limit the number of years or the amount they will pay. Ask lots of questions and make sure you understand what is covered. Take your time before buying.

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What is long-term care insurance?

Long-term-care (LTC) insurance can help cover the care you need if you have a long-term illness or disability. For example, the care may include help with bathing, dressing, grooming, and eating. Most LTC policies cover care in a nursing facility, in-home services, and adult day care programs. Assisted living may be covered, depending on your condition and the policy you have.

Health insurance does not pay for long-term stays at nursing facilities. They pay for medical care, not day-to-day personal care or room and board.

The older you get, the more likely you will need long-term care. Most LTC is given to older adults, but a person of any age may need these services.

What does LTC insurance cover?

For most LTC insurance, you pay a premium and the insurance company agrees to pay a certain daily amount to help cover the cost of long-term care when you need it. Most LTC policies start paying for services when you become unable to do some or all of your own personal care. Long-term-care can be very costly. Long-term-care insurance is one way to cover some of the cost. This amount that the insurance pays may be less than the total cost of care, depending on the plan you choose.

Medicaid, the government program for people with low incomes and limited assets, helps pay for long-term care if you qualify. Medicaid rules change. Also, Medicaid programs vary somewhat from state to state. For more information, check with your local social services department.

How do I decide if I need long-term-care insurance?

Long-term-care insurance can help you or your family cover expenses if you need long-term care later in your life. The longer you live, the greater the chance that you will spend some time in a nursing facility. Women are more likely than men to need LTC insurance because they tend to outlive their spouses. There may be no one at home to care for them.

Here are some things to think about:

• Can you get LTC insurance? Some LTC policies are not sold to people who have reached a certain age (for example, age 75). Some policies are not sold to people with certain illnesses, such as Alzheimer's disease.
• Do you want to leave money to your family when you die? Would your family be able to help pay for your long-term care? A stay in a nursing facility may cost over $100,000 a year. This kind of expense can wipe out your savings. Long-term care insurance can be less costly than paying for the care directly.
• Do you want to count on Medicaid to pay for your nursing facility costs? To get Medicaid, you must prove that you have few assets and meet medical criteria.
• How important is it for you to choose where you will have long-term care? Medicaid beds for LTC are limited. This means that you may not be able to choose which nursing facility you live in if Medicaid is paying for it. With LTC insurance, you may have more choices.

How much does LTC insurance cost?

The cost of LTC insurance varies greatly. Premiums depend on how old you are and your health when you buy the policy. They also depend on the benefits you choose and an estimate of when you may need benefits. Most LTC insurance policies do not cover the full cost of long-term care. Most plans limit the number of years or the amount they will pay.

The younger you are when you buy long-term-care insurance, the lower the monthly premiums are. However, if you buy the policy at a younger age, you will be paying premiums for more years before you are likely to need long-term care. You may be able to pay lower premiums if you agree to pay a certain amount of money out of pocket, called a deductible, before the insurance company pays benefits. The premium also depends on your medical condition, and how long the plan will pay benefits.

How do I choose the right policy?

Talk to several companies to compare prices and benefits. Ask for summaries of the policy benefits, and then look at each policy side by side. You may want to work with a broker who works with several companies. Be sure you understand the differences. Here are some questions to ask:

• What types of care are covered and in what settings (skilled nursing care, home care, assisted living, adult day care programs)?
• What are the daily and maximum benefit amounts of the policy?
• What disabilities or illnesses are covered? Which are not covered? Are illnesses such as mental disorders or Alzheimer's disease covered by the policy?
• Is there a waiting period for coverage?
• Are the premiums subject to change? If so, what would change the costs?
• Does the amount of daily benefit rise with inflation or over time?
• Is the policy automatically renewed?
• What happens if I cancel the policy?

Take your time before buying. Get everything in writing. Ask for references that include customers who have had claims paid. Find out how quickly the company paid their claims and any complaints the customer had.

Before you buy more than one long-term-care insurance policy, find out if the companies will work together to provide benefits, or if only one will pay.

Some senior groups and hospitals may have helpful information. You can also contact your state's insurance commission. Ask if there is a comparison guide or counseling program to help you.

You can get more information from:

• America's Health Insurance Plans
  1-202-778-3200
  https://www.ahip.org