Long term care insurance is a complicated product both because it’s new and because it’s designed to supplement other ways of paying for long term care. While most policies all have similar coverage conditions, double check your policy, so you don’t get surprised a decade or two later.
Long term care policies tend to be remarkably similar between companies. Most types of long term care will qualify for long term care insurance coverage. However, talk to your insurance company about any specific concerns you have.
Understanding long term care insurance just takes a little patience, but the effort can benefit your family as you age. To get quotes right now, give our long term care specialist a call at (888) 905-0333.
How Does Long Term Care Insurance Work?
Long term care is one of the more complicated insurance products you’ll ever deal with. The good news is that talking through different policies with a knowledgeable agent can clarify the varying aspects.
There are two different benefits on long term care, daily and lifetime limits. Some companies structure the lifetime limits as years that the daily limits will pay out. Others offer a pool of money and you can use that up as needed.
First, you’ll choose a daily limit. Use a tool for the average per-day cost of LTC in your area. Care costs vary widely based on where you live.
Next, you will pick either the lifetime amount or how long the company will pay your daily amount. Note that with companies who operate on the length of time, they won’t keep paying you if you stop needing care. You’ll have fewer remaining days if you go back into care.
LTC policies all have a waiting period before the payment kicks in. They can be as short as 30-days. More commonly, people choose 60-day or 90-day elimination periods. The tradeoff is policies with shorter elimination periods have higher premiums. Conversely, you’ll spend down more of your savings with a longer elimination period.
You can choose riders, and decide if you and your spouse will be purchasing a policy together and pooling your lifetime limit. Some companies make spousal policies cheaper because spouses tend to care for each other when they first fall ill which puts off needing professional assistance.
The other consideration is whether you will choose a 10-pay policy. The premiums are heftier compared to standard policies where you pay every month or year. But it’s only 10 payments, then your policy is in place, and you don’t have to think about it anymore.
When you need care, you will submit your claim to your insurance company. They’ll start ticking down the elimination period, then pay out your daily benefit.
How Long Does Long Term Care Insurance Last?
All long term care insurance companies have limits for how long they’ll pay out. Sometimes the policy will continue until the “pool” of money (the total amount of benefits) runs out. But the most common time limit is 3 years.
You will see the limit in the policy benefits. It runs along the lines of “X dollars a day for 3 years.”
If you survive beyond 3 years, the insurance company is no longer obligated to reimburse you for your care. If you pass away before 3 years is up, the insurance company keeps the remainder of the pool.
You can choose a shorter benefit period, such as two years. Many companies offer 5 year benefit periods. However, 5+ year policies get expensive fast.
What Does Long Term Care Insurance Not Cover?
Long term care insurance only pays for the bills associated with the living facility or in-home care.
It will not pay for your medications or hospital visits. This should be covered by your health insurance, Medicare, or Medicaid.
Pre-existing medical conditions can cause issues with long term care applications. But many will only be excluded from your policy instead of declined. If you have medical conditions beyond the normal ones associated with aging, talk with your insurance agent about your options.
What Does Long Term Care Insurance Cover?
Long term care covers most assistance you may need as you age. It’s based on the loss of one or two activities of daily living. These are:
Most current companies will start counting down the waiting period when you can no longer do two of these.
Does Long Term Care Cover Hospice?
Yes. Typically when someone requires hospice care, they have lost two activities of daily living. Like we’ve mentioned before, it’s always wise to read the whole policy in full before purchasing if you have a specific concern. You can also ask your agent.
Does Long Term Care Cover Assisted Living?
Yes. While initially designed only to cover nursing homes, the types of care available now offer more options depending on what kind of care someone ends up needing.
Does Long Term Care Cover Independent Living?
Yes. This is another type of care which has evolved out of the preference for staying out of nursing homes as long as possible. Long Term Care Insurance covers various kinds of extra care someone may need as they age or lose the ability to perform ADLs.
Does LTCI Cover Home Care?
Yes. The qualifications for LTCI benefits to kick in are being unable to perform two activities of daily living. If you are still able to live in your home and just need a little extra help, you can use your LTCI benefits to pay for it.
What about Alzheimer’s or Dementia Care?
Yes, this falls under the range of coverage too. While not strictly following the activities of daily living criteria, almost every policy available covers Alzheimer’s and other forms of dementia.
What Does LTCI Cost?
LTCI is expensive. Most people will pay at least $2,000. Some $5,000 or even $6,000 a year.
The factors affecting the price are primarily your age, but also your health and marital status. Insurance companies assume that a married couple will do their best to take care of each other before resorting to outside help.
You can also adjust the price by changing your benefit amounts, waiting period, and benefit period.
In short, the answer to “what does long term care insurance cover?” is almost any form of care when someone can no longer adequately care for themselves. It excludes medications and hospital bills, but the regular daily care from a professional elder care facility qualifies in most policies.
Always make sure to read through the insurance contract before signing to avoid any surprises or confusion.
How Abrams Insurance Solutions Can Help
With our long term care insurance specialist, we focus on helping families prepare for every possibility. We focus on taking the time to help each family understand the details of the policies they’re examining. That way they can make the best possible decision.
If you have any questions, don’t hesitate to give us a call at (888) 905-0333. We represent the leading long term care companies. Our job is to shop them all on your behalf to get you the features you want at the lowest price.