Long Term Care Insurance: The Ultimate Guide

Shawn Plummer

CEO, The Annuity Expert

If you’re like most people, long-term care insurance is something that you’ve never thought about. But it’s important to think about these things ahead of time so that when the time comes where you need long-term care insurance, there’s no scrambling and long waiting periods to get your coverage in order! So let’s talk about long-term care insurance, and then request a quote.

What is Long-Term Care Insurance?

When you have a chronic medical problem, a disability, or a disorder such as Alzheimer’s disease, long-term care insurance coverage reimburses the expenses of that treatment. The majority of plans pay for therapy received in a variety of institutions, including:

  • Home Health Care
  • Nursing Home
  • Assisted Living Facility
  • Adult Day Care

It is important to think about long-term care costs. If you wait until you need care, you will not be able to buy coverage. The best time to buy insurance is in your 50s and 60s because most people can still work at that age and enjoy a healthy lifestyle.

Whether long-term care insurance is the right choice depends on your situation and preferences.

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Is Long-Term Care Insurance Worth It?

The Federal Government is predicted that 7 out of 10 retirees above 65 will need some long-term care in their lifetime. In fact, Washington is charging a payroll tax to all WA employees to fund LTC in the future.

Long-term care is not covered by regular health insurance. Medicare will not help either. It covers short stays in nursing homes or rehab, but not custodial care.

If you do not have insurance to cover long-term care, you will have to pay for it. But there is help. You can get Medicaid, a government program that helps people whose income is low.

If you need Medicaid, you will have to live in a nursing home. Medicaid doesn’t pay for assisted living care in many states.

The Cost of Long-Term Care

Nursing Home

  • The median cost of care in a semiprivate nursing home room is $93,072 a year, according to Genworth’s 2020 Cost of Care Survey.
  • The median cost of care in a private nursing home room is $105,850 a year, according to Genworth’s 2020 Cost of Care Survey.

Community and Assisted Living Facility

  • The median cost of Adult Daycare is $19,240 a year, according to Genworth’s 2020 Cost of Care Survey.
  • The median cost of an Assisted Living Facility is $51,600 a year, according to Genworth’s 2020 Cost of Care Survey.

Home Healthcare

  • The median cost of Homemaker Services is $53,768 a year, according to Genworth’s 2020 Cost of Care Survey.
  • The median cost of Home Health Aide is $54,912 a year, according to Genworth’s 2020 Cost of Care Survey.

The Cost For Long-Term Care Insurance

Buying traditional long-term care insurance might not be affordable if you have a low income and little savings. Traditional long-term care insurance is also a “use it or lose it” type of insurance similar to car insurance.

The average cost for traditional long-term care insurance is $2,000 a year, and the cost can increase in the future.

Long-Term Care Insurance Cost Factors

  • Your age and health affect how much you will pay for a policy. If you are older or have more health problems, the more you will pay for a policy.
  • Your gender affects the cost. Women may pay more than men because they generally live longer and have a greater chance of making long-term care insurance claims.
  • If you are married, you can get cheaper insurance.
  • Different insurance companies will charge different prices for the same amount of coverage. That is why it is important to compare quotes from different carriers.
  • The coverage amount and additional benefits.

Long Term Insurance Alternatives

Permanent Life Insurance

This is available on some life insurance policies, like whole life. It lets you withdraw money from the death benefit to pay for long-term care expenses while you are alive. The death benefit to beneficiaries will be lower by the amount used for long-term care.

Long Term Care Annuity

A long-term care annuity is a deferred fixed annuity (hybrid annuity) designed to help pay long-term care costs without destroying retirement savings. An LTC annuity doubles (200%) or triples (300%) the investment (based on medical records) to generate a tax-free long-term care insurance benefit. LTC annuities also pass a death benefit onto beneficiaries if there is money left in the annuity.

Long-Term Care Insurance

Hybrid Long Term Care Life Insurance Policy

Asset-based LTC provides a set of benefits for long-term care costs if you need it in addition to a death benefit for beneficiaries. Typically you pay one large premium upfront or a series of payments.

Long Term Care Insurance

Find the best long-term care insurance coverage then request a quote.

How To Buy Long-Term Care Insurance

  1. Decide how much coverage you want.
  2. Shop and compare long-term care insurance quotes.
  3. Fill out an application and answer health questions. The insurer might ask to see medical records and interview you by phone or in person.
  4. Once you are approved for coverage, you start paying premiums.

You can buy insurance directly from an insurance company, a long-term care insurance agent, or your employer.

How To Use Long-Term Care Insurance

To be eligible for long-term care insurance benefits you must be unable to function at least two out of six “activities of daily living,” (ADLs), on your own or you suffer from dementia or other cognitive impairment.

Activities of Daily Living

  1. Bathing
  2. Caring for incontinence
  3. Dressing
  4. Eating
  5. Toileting
  6. Transferring (Mobility)

If you need care and want to make a claim, the insurance company will review medical documents from your doctor. They may also send a nurse to do an evaluation. If they approve your claim, they need to approve your service or facility of care too.

Most insurance policies say that after the “elimination period” (30, 60, or 90 days), you will get reimbursed for all of your medical expenses.

Most insurance policies will pay for care after you are eligible for benefits. They usually start paying out after you get paid to care, and up to a certain amount.

Married Couples

Some insurance companies allow couples “joint coverage” allowing spouses to share the cost of a long-term care insurance policy.

Is Long-Term Care Insurance Tax Deductible?

Long-term care insurance can have some tax benefits. If you itemize deductions, you can count part or all of the long-term care insurance premiums as medical expenses. The limits for how much of a deduction you get increase with your age.

Age at the end of the yearMaximum deductible premium
40 or under$450
41 to 50$850
51 to 60$1,690
61 to 70$4,520
71 and over$5,640

Long-Term Care Insurance Quotes

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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