Paying for long term care can be costly, even with financial assistance. You may already have health insurance, Medicare, or Medicaid to help offset the costs associated with some types of long term care such as nursing home residence or at-home care, but your coverage is limited and subject to stringent terms and conditions. To help finance your care, you might be thinking about purchasing a long term care insurance policy, an increasingly popular option among seniors for substantially subsidizing or eliminating costs of long term care. Here are a few questions and considerations to keep in mind for finding the best long term care insurance policy.
What is Long Term Care Insurance?
Long term care (LTC) insurance provides coverage for services associated with daily living assistance for aging or disabled individuals. Like other forms of insurance, LTC insurance covers daily, monthly, and yearly services up to a certain predetermined amount which is dependent on the type of policy you choose. Services covered include nursing home, hospice, and respite care, assisted living facilities, adult day care, special care facilities (for Alzheimer’s care), home modifications (installation of ramps, bars, or other safety needs), care coordination, and, of course, home care. Many policies also cover the cost of in-home medical therapies such as speech therapy, physical therapy, occupational therapy, and rehabilitation therapy, and skilled nursing services.
Who Qualifies for LTC Insurance? How Much Does it Cost?
The monthly premiums for long term care insurance and coverage availability primarily depend on the buyer’s health and age. Nearly all long term care insurance policies require medical underwriting and buyers with certain preexisting health conditions may not qualify. Nearly 45% of seniors in the 70-79 year age range are denied coverage, so if you are considering purchasing long term care insurance, it’s important to do so before the need arises. Common medical conditions that may preclude you from qualifying for long term care insurance include:
- Current use of long term care services
- Existing need for assistance with activities of daily living (bathing, feeding, dressing, etc.)
- A recent stroke, or a history of strokes
- Chronic or terminal illness, cognitive dysfunction, or neurological disease (AIDS, metastatic cancer, Alzheimer’s disease, or MS for example)
Most policies pay policyholders for their care costs on a daily basis for a fixed term (typically ranging from $100-300 per day for 3-5 years), while some policies offer pooled or joint coverage with a monthly or annual limit. Because the premiums are lower and the chances of qualifying for a comprehensive policy are greater when the policyholder is younger, you can also take advantage of inflation protection to defray the rising costs associated with a 10 or 20 year plan. According to the US Department of Health & Human Services, the average cost of a long term insurance policy in 2007 was approximately $2,200 per year and covered 4.8 years of benefits with a daily benefit amount of $160 and included comprehensive coverage for facility and home care.
Do I Need Long Term Care Insurance?
Only about 10% of seniors receiving long term care have LTC insurance to pay for it, while it’s estimated that 7 in 10 seniors will require long term care. It’s difficult to imagine needing extended care or assistance with daily activities, but preparing for it will greatly reduce the anxiety associated with financing this kind of care. Long term care insurance can be greatly beneficial for those who don’t qualify for government assistance and are able to afford the premiums. Like any other insurance policy, however, there are scores of terms, conditions, and “fine print” you must navigate and clearly understand before purchasing LTC insurance. The necessity for this insurance depends greatly on your personal circumstances, health, age, income, and preference. Be sure to discuss your options with someone who has your best interests in mind and whom you trust.