A Quick Guide to Long-Term Care Insurance
Long-term care insurance covers ongoing health or ADL support not covered by Medicare or Medicaid — things like home health care, adult day care, or assisted living facilities — that become more commonplace as we age. It can be helpful to rope long-term care insurance into your retirement planning conversations; in fact, it’s recommended you start looking into insurance options around age 50.
There may come a time in your life when you’re still you — and want to continue being you — but require a little support to do so. Maybe you have chronic health needs following an injury or surgery; maybe you need ongoing assistance because of a condition like diabetes or Parkinson’s. Or, maybe you just need a little help performing some activities of daily living.
Whatever the case, if you believe that this is a possibility in the future, you may wonder: what’s the best way to pay for the help I need? (Fair question).
One option to help cover these services is long-term care insurance. Like most types of insurance, there are several options to choose from, so before you sign up for anything it’s important to do your research to find the best fit for you.
To help, we’ve broken down the basics, below, of what you’ll need to know about long-term care insurance before you start your search.
Note: While it’s recommended that every aging adult have a long-term care plan, not everyone needs long-term care insurance. Read on to determine what makes sense for you.
What exactly is long-term care insurance?
Like the name implies, long-term care insurance is a policy that’s designed to cover, well, the long-term stuff. Long-term care insurance is issued as either an individual policy or you can purchase coverage through some employers that offer group plans.
Traditional health insurance policies cover the short-term or annual things: yearly physicals, hospital stays following minor issues or surgeries (like hip replacements) or more major issues (like heart attacks or strokes). However, this insurance will generally provide care designed just for a short recovery period: days or weeks, not months.
Long-term care insurance is designed for when you need ongoing care, usually for the types of services that may become more commonplace as you age: things like home care home health care, adult day care, assisted living facilities, and nursing homes — any type of service that’s meant to last indefinitely.
What’s covered by insurance plans?
Traditional Health Insurance:
Surgery
Acute care, such as heart attack, stroke
home health after surgery or acute care
rehab (PT, OT, speech pathology) after surgery or acute care
Doctor appointments
Primary care
Long-Term Care Insurance:
Home care
Assisted living
Home health to manage a chronic condition
Rehab to manage a chronic condition
Memory care facilities
Adult day care
What are the different types available?
Long-term care insurance typically works like other insurance policies: you pay a premium while the policy is in effect, then make claims along the way. There are several avenues you can follow, all of which are dependent on your specific situation and preferences.
Some policies are exclusively focused on long-term care services; others are hybrid policies that combine some type of permanent life insurance with a long-term care benefit.
Some life insurance policies have built-in benefits that can help pay for long-term care or similar types of expenses. These hybrid models may have an addition to the basic policy, called a rider, related to chronic illness or long-term care. This rider will allow the policyholder to receive benefits from the life insurance policy to cover long term care or chronic illness needs while the policyholder is still alive.
Usually, a long-term care policy must cover at least a year of expenses — that’s the minimum most providers will offer.
One thing to note is that each of these policies are individually underwritten, which means that you need to prove you’re in good health — with no cognitive conditions — before you can purchase a policy. In other words, if you’re already in a position where you require long-term care, you won’t be eligible.
To prove you’re in good health, you’ll need to undergo a screening (most places just require that you fill out an application) where you’ll be asked questions about your medical state.
Good resources to learn about long-term care insurance include your state’s department of insurance website, as well as "A Shopper's Guide to Long-Term Care Insurance," published by the National Association of Insurance Commissioners.
To make sure you get the right plan for you, it’s best to speak with an insurance agent or producer who will help you design an insurance plan to meet your needs.
How can I pay for long-term care insurance?
Long-term care policies tend to be relatively expensive, although prices will vary depending on where you live.
Certain plans might allow you to cover premiums with money from a health care savings account. Additionally, group policies offered through an employer might be more affordable than individual policies. Ditto for spouses: purchasing a policy as a couple often reduces premiums, and it may even qualify you for “shared care,” which means that if you exhaust your pool of benefits, you’ll be able to dip into your partner’s.
When should I start thinking about long-term care insurance?
A good rule of thumb is to start looking into long-term insurance around age 50. There are a couple reasons why this age is the recommended time. For one, most people around age 50 are already thinking about retirement; long-term care insurance is a relevant topic that most people rope into their retirement planning, at large. Another reason is that, because these policies offer age-based premiums, your premium will likely be lower the earlier you get involved. Also, you may want to look into long-term care insurance while you are still healthy.
What should I ask myself?
There are a few factors that you should think about as you’re considering long-term care insurance:
What’s my family health history? How long have your family members — parents, grandparents —typically lived? Did a lot of those same family members require any ongoing services toward the end of their lives? This is a good way to get a sense of your future health and whether it’s worth looking into long-term care insurance.
What’s my retirement plan? When you retire, do you plan on moving or staying in the same place? Your location will play a big part in determining logistics and cost of potential long-term care.
Will I have family members close by to help me as I age? If you won’t have family members close by — even just to provide some informal care services — a long-term care insurance policy will become a lot more valuable.
How do I file a claim?
Normally, you’ll want to file a claim when one of two things happen:
There’s been an event — say, you’ve suffered a stroke or fallen — that’s resulted in chronic injuries
There are significant changes with your memory or behavior (this is typically something that your family members will recognize and report; this is usually related to dementia)
To open a claim, you’ll generally need to call your insurance carrier and organize an evaluation (depending on the severity of the situation, this evaluation can take place in person or over the phone). From there, they — the carrier — will determine if you’re eligible for benefits. You won’t need to submit any medical records; the decision is primarily based on the evaluation.
Something to keep in mind: as most policies will have a cap on how many benefits you’ll receive, most people put off opening claims until they truly need them.
What to remember
At the end of the day, think about long-term care insurance as part of your overall retirement planning. It might seem odd to think about so far in advance, but the more you can ask yourself about your plans and preferences, the sooner you can figure out if a long-term care insurance plan is right for you.
Like any kind of planning, the overall goal is to save you stress down the road.
Curious about long-term care costs?
Use our search tool to find prices in your area.
Expert reviewed by
Beth Ludden
Beth Ludden is a Senior Vice President in CareScout’s long-term care insurance business. She has 30+ years working in insurance with a focus on long term-care planning solutions and public policy issues related to older population care needs.
Written by
Eric Larson
Eric Larson is a writer and filmmaker based in Brooklyn, NY. He’s worked on commercial campaigns for brands like Google, Amazon Fashion, and Casper, and his independent films have screened at renowned festivals in New York City, Los Angeles, London, and Paris.
