Long-term care insurance is a type of insurance policy that helps cover the cost of long-term care services, which are typically not covered by traditional health insurance or Medicare. These services may include assistance with daily living activities, such as bathing, dressing, and eating, as well as skilled care, such as nursing and therapy.
What is long-term care insurance?
The purpose of long-term care insurance is to assist people in becoming ready in case they ever require long-term care services. A person turning 65 today has a roughly 70% likelihood of requiring long-term care services and assistance at some time in their later years, according to the Administration for Community Living. Long-term care can be costly, and the majority of private health insurance policies do not cover it. It can take many different forms to fulfill a person’s needs for assistance with activities of daily living (ADLs).
Types of Long-term Care Insurance Policies
According to Robyn Pate, an insurance broker located in Georgia, there are two methods to acquire long-term care insurance. A person has two options when it comes to purchasing long-term care insurance: either as an add-on to a life insurance plan or as an independent policy from their favorite insurance company. As long as the policy is in effect, both plans demand premium payments, and the policyholder must file a claim each time they need to utilize the coverage. Additionally, the policyholder in both forms of plans choose the level of coverage they desire, which frequently influences the premium cost of the plan. The majority of policies include a daily benefit cap that would apply if the policyholder needed to use the benefits.
How Does Long-term Care Insurance Work?
According to Pate, for a long-term care insurance policy to pay its share of the expenses, a health care practitioner must recommend long-term care help regardless of the plan type. It is more probable that the insurance company will pay a home care agency or skilled nursing facility directly on the policyholder’s behalf if the person has a standalone policy. Certain stand-alone insurance will pay the policyholder directly. The “elimination period,” which often lasts 30, 60, or 90 days, is when the policyholder is forced to pay for the long-term care services they require under the majority of policies.
What Does Long-term Care Insurance Cover?
A long-term care policy helps cover the costs of a person’s care when they need help navigating ADLs due to a chronic medical condition, disability or disorder. To receive long-term care benefits under most policies, an older adult must require help within at least two ADL areas: bathing, eating, dressing, navigating the bathroom and getting in and out of a bed or chair. A health care provider must also predict that they will require this level of help for more than 60 days.
How Much Does Long-term Care Insurance Cost?
The age, health, marital status, and gender of the applicant are all factors that affect the long-term care insurance policy premiums. The policyholder’s desired level of coverage and the insurance provider’s price both influence the cost. The younger and healthier the policyholder is at the time of purchase, the less expensive long-term care insurance usually costs.
How Common Is Long-term Care Insurance?
Because it is more likely that an individual will require greater levels of care at some time in their later years and because the expense of treatment is increasing, long-term care insurance has been more and more popular since its inception in the 1980s. According to the U.S. Department of Health and Human Services, women often require care for three years on average—3.7 years compared to 2.2 years for males. Although 30% of older persons won’t need any long-term care at all, 20% are expected to need care for more than five years. The American Association for Long-Term Care Insurance estimates that 7.5 million individuals in the United States had long-term care insurance as of 2020. To be more precise, barely 7% of American individuals over 50 have
Pros and Cons of Long-term Care Insurance
Pros:
- aids in defraying long-term care expenses
- increases a person’s options for treatment as needed
- gives them and their loved ones comfort as they manage the final years of their life.
Cons:
- Can be expensive
- May not cover all types of care
- May have a waiting period before benefits kick in
How to Choose Your Ideal Long-Term Care Insurance Plan
It’s advised to discuss your alternatives with a qualified insurance broker if you’re thinking about getting long-term care insurance. They can assist you in finding a plan that both fits your budget and best suits your particular coverage needs. Additionally, they might look for customized plans that take long-term medical issues into account.
