Despite the large baby boomer generation, only about 13% of Americans invest in long-term care insurance. While this type of insurance might not be applicable to every senior, it's something worth considering. Long-term care insurance can help you manage the costs of care later in life by covering health situations that aren't covered by Medicare. But not all policies are created equal. Here are a few things to look at when considering long-term care insurance policies.
One of the first things you will want to look for in your policy is the services covered. Policies may include some of the following types of long-term care:
- Assisted living facility
- Home care
- Care coordination
- Nursing home
- Adult day care
- Home modifications.
For these services, some policies will require that you get care from licensed agencies, while others will let you to hire independent providers or family members.
Long-term care policies may differ in the amount of money they pay for specific services. For example, you might get $50 a day for personal care and $75 for assisted living. You might also get one flat rate regardless of the services needed. Some policies may also have a limit for the cost or the number of hours of care that you can receive. Review these amounts to make sure you're getting the coverage that you want.
If you are considering long-term care insurance, don't wait until you need to purchase it. Get your insurance when you are young and healthy. Typically, you can get a better policy before you develop health problems, which for most is before age 65. Getting your care insurance sooner rather than later may also mean, however, that you pay premiums for more years. Investing in long-term care insurance now could save you thousands down the road.
Even if you have long-term care insurance, you may have a waiting period, or elimination period, before you can receive the benefits for your personal care. Because of this, long-term care might not be your best option when it comes to covering short-term needs.
Many policies require that a senior demonstrates that they have lost the ability to eat, bathe, dress, use the restroom, or walk by themselves. If you don't meet the conditions laid out by your insurer, then you might not be able to use your policy — even if you do require care. Read the fine print of your policy to learn what the specific conditions might be to use your care plan. Learn how long the exclusion period is and how many years are covered.
There isn't just one type of long-term care insurance out there. Look into all of your options to find the best fit for your and for your family. Here is a brief outline of long-term care policy sources:
- Individual policies: Most long-term care plans are individual policies, which are purchased through an insurance agent. This care only covers your needs.
- Employer-sponsored policies: Some employers offer long-term care policies as an employee benefit. They might also have a discounted rate through an insurance company for individual policies. These benefits may also be available to family members. You can most likely still retain the benefits if you leave the employer.
- State partnership programs: Most states participate in the State Partnership Program, which allows you to keep some assets and still qualify for Medicaid. However, you will have to discuss this option with your insurance broker to see if the policy you're considering is eligible.
- Joint policies: Long-term care policies can cover more than one person, typically 2 partners but also fro 2 unrelated adults. With this type of policy, you can share the care benefits, but you also run the risk of one partner depleting the benefits.
- Hybrid policy: Another option is to include long-term care with your life insurance policy. Many forms of this mixed policy allow your heirs to receive payment for any benefits not used during your lifetime. You may also be able to sell your life insurance to pay for long-term care. But it's best to discuss this option with your insurance agent.
These are just a few of the elements to consider when purchasing a long-term care policy. For more information about navigating long-term care, review our eBook The Complete Road Map to Long-Term Care. Access our free resources by first finding your local Caring Senior Service.