Long-term Care Insurance
A long-term insurance policy can reimburse you a daily amount for any long-term care services you need. This can include Activities of Daily Living (ADLs) and Instrumental Activities of Daily Living (IADLs). When applying for a long-term care insurance policy, you’ll be able to choose from a range of options to pay for care. Read on to learn exactly how you can use your insurance to pay for long-term care.
Do you need long-term care insurance?
Most people who buy long-term care insurance do so in their 60s, usually at age 65. The reason this is because people younger than this are not fully able to estimate what their financial future will look like. On the other hand, people who wait too long to get these type of policies will usually see higher monthly premiums, or not qualify at all. So this leads to the critical question: “What types of care could long-term care insurance cover?”
Types of care covered
ADLs (daily tasks) include things like:
- Basic hygiene care
- Getting dressed
- Using the restroom
- Transferring between bed, chair, couch, etc.
- Incontinence care
IADLs (daily functions) can include:
- Financial management
- Taking medication
- Cooking and cleaning
- Grocery shopping
- Pet care
- Using the phone or other devices
Help with ADLs and IADLs can happen in-home, at a nursing home, skilled nursing facilities (SNFs), among other senior care facilities. Here are several contexts in which assistance with these tasks can occur:
- Assisted living, which offers 24-hour assistance
- Home care, which can be at your home or a loved one’s home
- Community, which can involve community services that offer things like adult day care, meal programs, and senior centers
- Supportive housing programs, which are programs with low-cost housing for senior citizens with lower incomes
- Continuing care retirement communities
- Nursing home care, which provides care to those who can’t get care at home or in the community
Accessing your long-term care policy
There comes a time when your health starts to decline and you realize you need long-term care. If and when that time arrives, how will you know how to access your insurance benefits?
Before you can receive the benefits of your LTC insurance policy, you will need to be familiar with two important concepts: Benefit Triggers and the Elimination Period.
A benefit trigger is what your insurance company uses to decide if you’re eligible for your policy’s benefits. Most insurance companies use a form that would be completed by a nurse or a social worker.
Usually, an insurance company defines benefit triggers in light of ADLs or any cognitive impairments. The latter is defined as a lack of short or long-term memory, difficulty orienting yourself with other people, having trouble with places and times, or difficulty using reason or judgment relating to safety. If you need help with two or more ADLs or have cognitive impairment, your insurance company will most likely see that as a benefit trigger.
Once triggered, a care manager from the insurance company will assess you and approve a Plan of Care that lays out what benefits you can get.
The elimination period
After a benefit trigger occurs, but before you start receiving funds to pay for services, is called the Elimination Period. The elimination period is similar to a deductible on your health insurance policy. It’s the amount you pay before your long-term insurance kicks in.
Most insurance policies let you choose the length of the Elimination Period from 30, 60, or 90 days after you purchase the policy. During this period, you will have to pay for any services you receive, and some policies even require that you pay for some sort of long-term care during this time.
What happens once your benefits begin?
Once you start receiving benefits, your policy may pay for services up to a certain daily amount until you reach the overall (lifetime) maximum amount. Or, your policy may give you a predetermined amount of money each day that you meet the benefit trigger stipulations, even if you didn’t receive care on that day.
Costs of senior care
Because you may have to pay for some services during the Elimination Period, you should know what that could cost you. Here are the national averages of long-term care costs in the United States, according to LongTermCare.gov:
- $225 per day or $6,844 per month for a partially private nursing home room
- $253 per day or $7,698 per month for a full private nursing home room
- $119 per day or $3,628 per month for a one-bedroom unit and associated care in an assisted living facility
- $20.50 an hour for a professional health aide
- $20 an hour for personal homemaker services
- $68 per day for adult day care services
Obviously, this all depends on the specific type of care, the care provider, where you live, and the timeframe in which the care happens. Even things like the time of day can affect how much care costs -- evenings, weekends, and holidays are usually more expensive than daytime care. If you’re a part of an adult care program, you can be charged more depending on what activities you choose to be a part of.
All of this to say, getting long-term care insurance can be a smart idea and a money-saver.
Risks and benefits of accessing plan benefits
Like we mentioned at the beginning of this guide, not everyone agrees that LTC insurance is a good idea. And, both sides have good arguments. LTC insurance, with the right policy, can be very beneficial to you in your older years. What if you need elder care and you don’t have LTC insurance? Where will you get the money to just live your daily life?
On the other hand, you’ll want to make sure your LTC insurance policy has some sort of reimbursement clause if you end up not needing long-term care. Otherwise, you could be out thousands of dollars. It may be a good idea to speak with an insurance lawyer to make sure you have a reimbursement feature in your policy.
Alternatives to using insurance
If you’re not sure you’ll need LTC insurance, you can get what’s called a hybrid plan. This is when you have another type of insurance policy packaged with LTC insurance. Often, you’ll see life insurance and LTC insurance combined into one policy. You can also convert certain types of life insurance into a long-term care benefit plan.
Choosing a long-term care provider
Whichever way you pay for your (or a loved one’s) long-term care, you will need to know how to find the right provider, one that offers a healthy balance of quality care and affordability. When getting ready to choose a senior care provider, there are three big questions you should ask:
- What kind of services do I need?
- How will I pay for these services?
- How can I choose the best quality services for my needs?
After you find a provider that offers the services you need, proves their care is top-quality and fits within your budget, the U.S. Department of Health & Human Services suggests you make sure state agencies and accreditors will vouch for and support that provider. If you’re looking for more info about the long-term care services in your area, you can call The Eldercare Locator at 1-800-677-1116 (open weekdays, 9.00 a.m. to 8.00 p.m. EST). You can also visit the Nursing Home Compare website to find nursing homes near you.
Questions to consider
The three aforementioned questions are a good place to start, but you’ll want to be totally confident that you’re choosing the right provider. This is your long-term care, after all. So here is a list of questions that you should also ask while looking for a long-term care provider:
- Is the staff enjoyable to be around?
- Is the atmosphere positive?
- Do the staff members treat adults with respect?
- Are the residents/provider’s patients well taken care of?
- Is the facility generally clean?
- How are the organized activities?
- Does the provider offer religious services?
- Are there ever any trips outside of the facility?
- Can I bring my own furniture and personal belongings?
- Does the facility offer hospice services too?
- Would it be safe to live here?
- Does the facility have all of the necessary licenses and inspections?
- Have current or former residents complained about this facility/provider?
- How much will it cost to live here/receive services from this provider?
- Under what circumstances, if any, would a resident be discharged?
- Would I want to live here for a long period of time?
- Do I trust this provider?
Long-term care insurance FAQs
1. What is long-term care?
Long-term care is designed to meet the needs of someone’s health or personal needs over a short or long period of time. LTC services help people live as independently as possible even though they are not able to perform ADLs on their own. This can include hygiene care, eating, bathing, getting dressed, and many more things.
2. Where can long-term care services be provided?
Help with ADLs can occur in many places, like a nursing home, in an assisted living facility, or even in-home care. It depends on your preferences and your needs.
3. What does long-term care cost?
Below are the United States’ national averages of long-term care costs, according to LongTermCare.gov:
$225 per day or $6,844 per month for a semi-private room
$253 per day or $7,698 per month for a full private nursing home room
$119 per day or $3,628 per month for a one-bedroom unit and associated care in an assisted living facility
$20.50 an hour for a professional health aide
$20 an hour for personal homemaker services
$68 per day for adult day care services
4. What is a long-term care insurance plan?
LTC insurance can help pay for some or all of the costs of LTC services. Like other insurances, you would pay a monthly insurance premium to ensure you have
5. How do I pay for long-term care until long-term care insurance can reimburse me?
There may be a period of time where you or a loved one will have to cover the expenses if long-term care until LTC insurance kicks in. During that time, you may have to dip into your savings account(s), your home, or your retirement account, and Medicaid may be able to help with the care expenses.
Other ways include using a combined insurance policy or converting your life insurance into a long-term care benefit plan.
Health and medical insurance, however, do not cover long-term care, which is not medically related, it’s related to daily functions.
6. When should I buy long-term care insurance?
If you’re going to buy LTC insurance, you should do so before you actually need it. It’s best to insure yourself before your health possibly starts to decline. Most LTC insurance customers buy a policy in their 60s, most often around age 65.
7. Where can I get long-term care insurance?
You can speak with your insurance agent or even your financial planner. Also, you can see if your employer offers any type of group LTC insurance. Additionally, you can look into your state’s Partnership Program.
8. Will my pre-existing conditions affect my ability to get long-term care insurance?
Possibly. If you do have a pre-existing condition, it would not be surprising if an insurance company denies you coverage as this has happened many times before. But it all depends on the insurer and the type of pre-existing condition.
Just make sure you ask your insurance agent lots of questions before buying a policy. If you do get denied by one insurance company, that doesn’t mean the next company will do the same.
9. I’m in a place where I need long-term care. How can I get access to my long-term care insurance benefits?
Before you can start reaping the benefits of your insurance, the insurance company needs to identify the Benefit Trigger(s), which is when you are not able to perform two or more ADLs on your own and/or have a cognitive impairment (lack of short or long-term memory, difficulty orienting yourself with other people and places, etc.). Once a care manager from the insurance company evaluates you and decides that you need care, you enter the Elimination Period.
The Elimination Period is after the benefit trigger is identified but before you start receiving insurance funds. Your policy probably lets you choose this period of time from 30, 60, or 90 days after you purchase the policy, during which you will be responsible for paying for care until your insurance can reimburse you.
10. How can I be sure that my insurance agent/company is/are trustworthy?
First, you’ll want to double-check that the agent and company you’re working with are licensed to sell LTC insurance. You can contact your state’s Department of Insurance. Next, ask them if they have received and continue to receive training related to LTC insurance. And lastly, check the company’s rating on the Better Business Bureau’s website.
11. My long-term care insurance benefits just started. What now?
Most likely, your policy will pay for services up to a specific daily amount until the cost of your care has reached its maximum limit. In another case, your policy could set a predetermined amount of funds for each day that you continue to meet the benefit trigger boundaries.
12. How can I minimize the amount of money I spend on long-term care insurance?
First, you can choose a shorter benefit period, in other words, the number of months or year you will receive care benefits. Second, you can choose a longer Elimination Period (up to 90 days). Third, you could reduce the daily or monthly benefit you receive (after the benefit trigger). Lastly, you could go with a share insurance policy.
13. What is a shared insurance policy?
A shared insurance policy is when you and your spouse, partner, or related adult share the costs and benefits of an LTC insurance policy. These are usually a bit more expensive than individual policies, but they may end up providing more coverage at less of a cost per person on the policy.
14. What is a hybrid insurance policy?
While a shared policy covers two people, a hybrid policy combines long-term care coverage with another type of insurance, like life insurance or fixed annuities.
One great thing about hybrid policies is that not all of your insurance is tied up in a long-term care policy. In this case, if you were to pass away before all of the long-term care coverage was used, your beneficiaries would get a partial refund of your premiums.
15. Will my care provider/long-term care facility accept my long-term care insurance coverage?
Unlike most medical health insurance companies, LTC insurance companies simply pay for your long-term care regardless of the provider or facility. Instead of having a “network” of providers they work with exclusively, they accept bills from any licensed professional, provider, or facility that sends them a bill for your long-term care.
16. I’ve heard I can use my life insurance to pay for long-term care. Is that true?
Yes, that is possible. Depending on the situation and what life insurance benefits your policy has, you may be able to convert your life insurance into a long-term care benefit plan. Usually, through combination products, accelerated death benefits, life settlements, and viatical settlements, you can convert your life insurance.
For more info, you can read our guide “How To Use Your Life Insurance Policy To Pay For Long-Term Care.”
17. My adult children are willing and able to care for me if needed. Do I still need long-term care insurance?
That’s great that you have children who can help, but that doesn’t mean you should ignore LTC insurance. However, this will allow you to customize your insurance policy and not pay attention to some aspects of it. For example, rather than getting a policy that would provide for
Proximity of care is very important when considering options
Research care options that are nearby when thinking about the next step for your loved ones.
Leona J. Werezak RN, BSN, MN is a registered nurse and adjunct nursing professor. She has 24 years experience working in a variety of healthcare settings including such remote locations as the Arctic Circle. Her research in early stage dementia was published in the Canadian Journal of Nursing Research and re-published in their 40th anniversary issue which showcased exceptional research published since the journal began. Her work in dementia care has also been published in the Journal of Gerontological Nursing. She currently teaches surgical nursing care on a thoracic/vascular unit to baccalaureate nursing students. Her clinical work with nursing students involves extensive work with older adults who have multiple chronic health conditions.