A Comprehensive Guide to Long-Term Care Insurance

long term care insurance

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Long-Term Care Insurance Explained

Long-term care insurance is an increasingly common option available to people concerned about the cost of long-term care services in retirement. The cost of long-term care can be significant and is often not covered by healthcare plans. With the rising cost of health care, there is a growing demand for reliable and affordable long-term care insurance.

In the best of times, selling long-term care insurance can be challenging. Are you willing to remind yourself that a nursing home might be where you spend your final days? Well, there you go. Despite recommendations from a few experts that you can buy long-term care insurance when you’re in your 60s, the AALTCI recommends getting one when you’re in your mid-50s.

Costs of long-term care

But a retirement plan must take into account long-term care. If you’re doubtful, consider how much long-term care costs in the US, where 70% of citizens require it. According to the 2019 long-term care (LTC) insurance broker Genworth’s survey on the cost of care, an assisted-living facility costs $48,612 a year for a single room. In a nursing home, a private room costs more than twice as much ($102,200) than a semi-private one ($90,155). This is not covered by Medicare. Medicare pays for long-term care services, but there are strict income and asset limits.

It may come a time when you have to consider the need for long-term care for your parent, spouse, sibling, or other family member. There are many types of long-term care. They can include assisted living, nursing homes, home care, and other options. Those on a limited budget may not be able to afford any of these options as we saw above.

Insuring the future needs of your loved one can mean the difference between financial hardship and comfortable retirement. Choosing the right long-term care insurance policy can be confusing, so you should know exactly what you’re getting. In spite of its ability to minimize aging adult expenses, no long-term care insurance plan covers the full cost of all options.


Benefits from a long-term care insurance policy

Long-term care insurance can be a difficult product to understand for many consumers. With price factors like daily burn, term and death benefits, and the effects of inflation, the cost of long-term care insurance can be mind-boggling. Understanding the cost of long-term care insurance is crucial to predicting how much you will need for long-term care in retirement.

In some states, such as California, Connecticut, Indiana, or New York, a policy is even useful if you have modest assets. Those states offer the Partnership for Long-Term Care program, allowing credit for benefits from a long-term care insurance policy if you end up needing Medicaid coverage. Each dollar the policy pays in benefits enables you to spend a dollar less on care if it’s exhausted. A person receiving $50,000 in benefits from a long-term care insurance policy may be allowed to keep $50,000 of the assets they must “spend down” in full before they are eligible for Medicaid coverage.


Which factors affect the cost of long-term care insurance?

It is not easy to decide on a long-term care insurance policy. To make this decision, you need to understand the factors that affect the cost of long-term care insurance. Costs may vary depending on the following factors:

  • The applicant’s age
  • Amount of benefits paid per day
  • Duration of the benefit
  • Pre-benefits waiting period
  • Covered services
  • Applicants’ health status when applying for the policy
  • Desirable inflation protection
  • Amount and type of long-term care provided on the applicant’s state/regional basis
  • Other provisions


Checklist Of Long-Term Care Insurance Policies

Buying long-term care insurance requires carefully selecting a plan that meets your individual needs and goals after you’ve decided to investigate it. There are also some basic features of most long-term care insurance plans that should be known:

Daily/monthly benefit amount

The amount your policy covers for long-term care needs for one day or one month. A number of factors will determine the amount of benefits you receive, including the cost of hospitalization you might incur in the area where you expect to need long-term care.

Elimination period

It is the time after which you will be eligible for benefits. Elimination periods serve the same purpose as deductibles or out-of-pocket expenses under health or automobile insurance. However, unlike other deductibles, it is defined by time, not by dollar amount.

Benefit period

It refers to the time period in which you will receive covered benefits.

Inflation protection

As health care costs rise, you will be able to keep up. Purchasing coverage and actually utilizing it may be separated by a long period of time. With inflation protection, your health care benefits will be protected and you will be kept up to date on rising health care costs.

Premium discounts

These may be available to you if you are qualified for preferred health or a couple’s discount.

Care coordination

Family members can benefit from the guidance of a health care professional as they work toward developing a personalized care plan.

Activities of Daily Living (ADLs)

The benefit trigger for many long-term care insurance policies is a need for assistance for at least two of the activities of daily living for a period of time expected to last at least 90 days. Bathrooming, dressing, toileting, continence, and transferring are ADLs, and severe cognitive impairment (e.g., Alzheimer’s disease) is also an ADL.

Free look provision

A period of time during which the owner can inspect the policy and return it to the insurer for a full refund of premiums. A 30-day free look period is one of the requirements of qualified long-term care insurance policies.

Lifetime maximum benefit

Throughout the life of a long-term care policy, this is the maximum amount that can be covered by that policy. Policyholders are often referred to it as a pool from which they can draw money. After that money is exhausted, the policy no longer pays benefits.


Federal and state programs that cover health care in proportion to a patient’s income and assets if they have low incomes or high medical bills.


Those over the age of 65 and certain ill or disabled persons can participate in this federal program to receive medical and hospital insurance. The benefits of nursing homes and home health care are quite limited.

Skilled care

The highest level of care without confinement to a hospital and is nearly always provided in an institution and is commonly known as nursing care. Medicare has limited coverage for skilled care.

Intermediate care

Provides extensive nursing care or rehabilitation services as ordered by a doctor. This care is typically provided by nurses or nurse’s assistants to people with limited functional ability who don’t require continuous care. Medicare typically does not cover intermediate care.

Custodial care

Provides assistance with activities of daily living such as eating, dressing and bathing. It can be offered by individuals without specialist training, but Medicare doesn’t cover it.


Final thoughts

Taking advantage of long-term care insurance is a wise decision, and an insurance professional with specialties in long-term care insurance will be able to assist you. Prior to making a decision about which planning strategy is best for you, be sure to get the facts.