Long-Term Care Insurance

Shawn Plummer

CEO, The Annuity Expert

Like most people, you probably don’t consider long-term care insurance until you need it. But, unfortunately, by that time, it is often too late. The good news is that LTC insurance can be a valuable asset for anyone, regardless of age or health status. This beginner’s guide will discuss the basics of long-term care insurance and how it can help you protect your finances if you need long-term care services.

What is Long-Term Care Insurance?

Long-term care insurance is invaluable for anyone aged 65 and older or with a debilitating or chronic illness requiring constant supervision. This policy covers nursing home, home health, and personal/adult daycare services and provides peace of mind knowing you are prepared in the case of unexpected medical bills. In addition, LTC insurance offers more flexibility and options than many public assistance programs, such as Medicaid.

It helps cover the costs of that care when you have a chronic medical condition, a disability, or a disorder like Alzheimer’s.

It will also cover expenses for a visiting or live-in caregiver, companion, housekeeper, therapist, or private-duty nurse up to seven days a week, 24 hours per day, up to the policy benefit maximum.

How Does Long-Term Care Insurance Work?

LTC insurance generally pays a set daily or monthly benefit for a set period, usually two to five years, to help pay for a wide range of these services, including in-home care, assisted living, adult day care, and nursing home care.

To receive benefits, you must meet the policy’s eligibility criteria, including a health assessment and a doctor’s certification of the need for LTC. The amount of help you receive depends on the type and amount of coverage you have chosen.

Who Should Get Long-Term Care Insurance?

Those between 45 and 85 years of age are ideal candidates for LTC insurance, as it allows them to secure coverage without depleting their assets. Long-term care insurance is designed to help protect one’s assets and savings from being used to pay for care.

Generally, people should consider LTC insurance if they are concerned about the rising cost of these human services, want to protect their assets and savings, or enjoy more flexibility and choice in their care options.

What Are the Benefits of Long-Term Care Insurance?

Long-term care insurance benefits include helping to cover long-term care costs, providing more flexibility and options than many public assistance programs, and protecting one’s assets and savings from being used to pay for care.

Additionally, LTC insurance can help relieve the financial burden on family members and provide peace of mind knowing that your care needs are taken care of if the need arises.

What Does Long-Term Care Insurance Cover?

LTC insurance covers a wide range of human services, including skilled nursing care, custodial care, and assistance with personal care services such as bathing, dressing, eating, and more. Additionally, many policies include inflation protection so that your coverage keeps pace with the rising costs of long-term care.

It may also cover home health care and adult day care services. It is important to note that each policy is different, so it is essential to read it carefully and ensure you understand what is and is not covered.

What Does Long-Term Care Insurance Pay For

The insurance pays for both formal and informal care that includes the following:

What are some reasons people may purchase long-term care insurance?

People choose health insurance to protect their long-term health and financial security if they cannot take care of themselves later in life due to illness or disability. It can also provide individuals with greater peace of mind knowing that if long-term care is needed, they or their families won’t have to worry about covering the costs all at once.

Long-term care insurance also covers medical expenses associated with long-term care and daily services such as transportation, homemaking, and home modifications, allowing people to stay in their homes longer versus leaving for more costly long-term care facilities.

The family wants their assets protected from the cost of providing and maintaining the inherited inheritances for their children. Providing quality services like personal care in your home or at work for a family member. Please give them more choices than nursing homes and provide financial circumstances support when necessary.

How Much Does Long-Term Care Insurance Cost?

Long-term care costs vary widely, but the average 55-year-old man will pay $1,700 per year for a three-year policy that covers $164,000 in care. The average 55-year-old woman will pay $2,675 for the same coverage. However, some states allow for savings of up to 30%, while others trim them back to around 15%.

Hybrid policies are typically thousands of dollars more than traditional ones. This is because, on top of LTC insurance, you’re also paying for life insurance you might not even need. Generally, it is recommended that you spend no more than 5-10% of your annual income on LTC insurance.

Is Long-Term Care Insurance Tax-Deductible?

Yes, premiums may qualify as a medical expense deduction—eligibility and the amount of the determination depend on your age and the number of tips you pay. Generally, you may deduct the portion of your insurance premiums that exceed 7.5% of your adjusted gross income (AGI).

What is the difference between life insurance and long-term care insurance?

Life and long-term care insurance are both critical investments to help provide financial security in life. In addition, they are similar in that they both serve as a vehicle to help plan for and manage life’s uncertainties.

However, life insurance is designed to protect against life event losses – such as the death of an insured or income replacement due to disability – while long-term care insurance serves to reimburse long-term health care costs.

Life insurance pays a lump sum death benefit, while long-term care provides coverage to help pay for expenses associated with living assistance should the insured require extended medical attention. Health insurance companies can offer the same long-term care coverage as well.

What Are the Different Types of Long-Term Care Insurance?

There are two main types of long-term care insurance: traditional policies and hybrid policies.

Traditional policies are designed solely to cover these human services, while hybrid policies provide benefits and coverage.

Additionally, there are stand-alone policies, which cover only LTC services, and policy riders, which are add-ons to a life insurance policy that provides this coverage.

What Is Federal Long-Term Care Insurance?

Federal Long-Term Care Insurance is an insurance program offered to federal employees and their family members.

The program provides comprehensive coverage for many LTC services, including home health care, assisted living, daycare, nursing home care, and respite care. The U.S. Office of Personnel Management administers the program, and is available to federal employees and their eligible family members.

How to Choose the Right Long-Term Care Insurance Policy

Choosing the right long-term care insurance policy can be complex and challenging. It would be best to start by researching different approaches and comparing the benefits, coverage, and long-term care costs. Consider your age, health services, lifestyle, and budget when making your decision.

Then, ask questions and seek advice from an experienced insurance agent or financial advisor to ensure you understand your chosen policy details. Finally, it would be best to consider other options, such as relying on family caregivers or government programs, to help cover long-term care costs.

Next Steps

Long-term care insurance is a vital part of financial planning, yet many people wait until it’s too late to get a policy. Don’t let yourself be one of those people. Instead, educate yourself on the different types of long-term care policies available and find one that fits your personal needs and budget. And finally, don’t forget to get a free quote from us. We would be happy to help you find the perfect policy for you and your family.

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Frequently Asked Questions

What is the best elimination period for long-term care Insurance?

According to industry experts, the best elimination period for long-term care insurance is typically between 90 to 180 days. This length of time allows the policyholder to receive the maximum benefits from their policy while still having the lowest possible premiums.

What are some factors you should consider when buying long-term care insurance?

Long-term care insurance can be essential in planning for long-term financial security. However, before committing to a long-term care policy, you should consider several factors, such as the range of benefits offered, the length and type of coverage, and the monthly or annual premiums. In addition, evaluating whether long-term care insurance is suitable for your specific situation is key to determining if it’s the right decision. Also, discussing your needs and options with your insurance company and an experienced insurance professional before selecting a long-term care insurance policy is essential.

What type of facilities does long-term care insurance cover?

Long-term care insurance offers a variety of facilities to help elderly adults maintain their independence, quality of life, and well-being. Examples would be assisted living facility, an adult day care center, and a nursing home.
Long-term care facilities can include assisting with activities of daily living such as eating, bathing, dressing, preparing meals, and administering medications; providing access to home health aides in one’s home; offering long-term nursing care in skilled nursing homes; and offering respite care services for caregivers.
Long-term care insurance also provides coverage for adult daycare services when necessary and helps to cover the cost of supportive devices such as wheelchairs or walkers. In addition, with long-term care insurance often comes assistive technology options like telehealth visits as a way for seniors to manage their long-term care from the comfort of home.

At what age should you consider purchasing long-term care insurance?

It is essential to consider purchasing long-term care insurance before the need arises, as eligibility is based on health factors, and costs increase with age. A good age to consider long-term care insurance is between the ages of 45 and 65 when individuals are still in relatively good health but may be planning for their long-term future.

What happens if you run out of money for long-term care insurance?

A few options are available if you run out of money for long-term care insurance. First, you may be eligible for government programs such as Medicaid, which can help offset long-term care costs.
Additionally, you can look into other forms of financing, such as reverse mortgages, life settlements, long-term care insurance policy loans, or other forms of private funding.

What does Long-Term care insurance not cover?

Long-term care insurance typically doesn’t cover care provided by family members, medical care costs, daily benefit amounts, regular health insurance costs, home care-only services, activities of daily living, homemaker services, and policies based on health history. Additionally, long-term care insurance does not provide coverage for end-of-life expenses, including hospice or burial costs.

How long does Long-Term Care insurance last?

Typically, long-term care insurance policies have a long duration, but it varies depending on the policy. Generally, long-term care insurance policies provide coverage for two years or more; some can last up to five, six, seven, and even unlimited years.

Do Long-Term Care insurance premiums increase as you age?

Yes, premiums for all long-term care insurance policies may be increased. However, if premiums are based on the issue age, they are typically expected to remain stable throughout the policy’s life.
Premium increases are usually due to factors such as inflation, changes in the cost of healthcare services, increases in the cost of claims, and other factors.

What is the difference between an assisted living facility and a nursing home?

Assisted living facilities and nursing homes are both long-term care options designed to accommodate the needs of individuals who require assistance with everyday activities. The main difference between these two facilities is that an assisted living facility provides more independent care and is often less expensive than a traditional nursing home. In contrast, a nursing home offers 24-hour medical care and supervision.
Long-term care insurance programs generally cover expenses associated with assisted living but may not provide coverage for all services offered at a nursing home. Therefore, when deciding which long-term care option best fits your particular circumstances, it is essential to consider the varying levels of medical attention needed and the financial costs associated with each type of long-term care service.

What does the lifetime maximum look like in long-term care insurance?

The long-term care insurance’s lifetime maximum is typically between $150,000 and $450,000. However, this number can vary depending on various factors, such as your age at the time of enrollment or any riders you might have added.

Does Long-Term Care Insurance cover severe cognitive impairment?

Long-term care insurance is essential for anyone looking to cover long-term care costs, as it can complement existing health and disability insurance and provide additional coverage. Though long-term care insurance policies vary, many include coverage for diseases that involve severe cognitive impairment, such as Alzheimer’s Disease and other forms of dementia. This added coverage can help to minimize long-term care expenses that are otherwise not covered by traditional health and disability insurance. Therefore, careful consideration should be taken when selecting a long-term care policy to ensure that the policy covers severe cognitive impairment & your specific long-term care needs.

Is Long-Term Care Insurance Worth It?

The Federal Government predicts that 7 out of 10 retirees above 65 will need some long-term care in their lifetime. Unfortunately, long-term care is not covered by regular health insurance. Medicare will not help either. Covered care only includes short stays in nursing homes or rehab, but not custodial care.

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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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