Long-term Care Insurance: In Case of a Prolonged Illness or Injury
While no one likes the idea of being a burden to their families, often plans are not able to avoid such a situation ahead of time. This may be due to a reluctance to invest money now toward comfort and care we may or may not need in the future.
But as people discover the considerable resources it takes to care for infirm parents and other loved ones, the business of long-term care insurance is growing. Depending on where you live, a nursing home or other care facility may cost over $90,000 each year (in New York state). Long-term care policies cover major expenses such as in-home healthcare, assisted living facilities, and nursing homes for those who are ill for long periods of time—regardless of age.
Here are some of the basics of long-term care insurance.
Where to Buy It
In the US, over 100 companies offer long-term care insurance. Group coverage may be offered by your company as an optional benefit. Individual coverage, on the other hand, is a choice for people who are self-employed or unemployed, or work for a small company that does not offer it.
When buying long-term care insurance, shop carefully. Be sure you understand the details of the plan and are confident you are choosing a plan that works for you.
What It Covers
These policies generally pay for the help you may need during a prolonged period of disability due to physical or cognitive impairments, such as
. This may include standard home care, adult day care, nursing homes, assisted living, and management services that help monitor and arrange for care. The plans may also cover adult day care and "respite" care when your regular caregivers need time away.
The insurance usually covers both "skilled" and "unskilled" care. Skilled care refers to health professionals—doctors, nurses, licensed therapists, etc. “Unskilled” care generally refers to untrained individuals hired to help with dressing, eating, going to the toilet, and other activities of daily living (also known as ADLs).
Policies can be specific about what they cover. The ADLs most insurers list are bathing, continence, dressing, eating, toileting, and transferring, and most do not start payment until the patient is limited in several capacities.
What It Does Not Cover
Before you buy, make sure you understand what the policy does and does not cover. Most policies do not cover mental disorders other than dementia. They will not cover addictions or disabilities caused by self-inflicted injuries.
Some insurers will not offer private policies to high-risk individuals who are more likely to need long-term care at some point sooner than the average person. Patients with chronic diseases or unhealthy lifestyles may find it more difficult to obtain coverage. With some effort, however, many of these patients can find coverage if they are willing to pay a higher premium.
Additionally, insurers may sell long-term care policies to older people with health problems, but they will initially withhold coverage for any pre-existing conditions during a set period, such as 90 days to 6 months.
Many group policies through employers have no restrictions on who is eligible for coverage.
Like any other kind of insurance, the cost of a long-term health policy depends on how much coverage you buy and what stage of life you buy it in. Logically, the premiums are less expensive when you are younger because the underlying assumption is you will pay for them longer.
Generally, insurers put a dollar and a time limit on what they will cover. Some, for example, will pay $100 a day for five years in a nursing home. Others will pay perhaps $250 a day for a shorter period of time. Often they will pay less for other types of care, and most have a maximum amount they will pay in a lifetime.
Nearly all plans are renewable—meaning that they cannot be canceled as long as you pay your premiums on time and gave accurate information about your health in the application. Under this regulation, if you become ill and have paid your premiums, a company cannot shut you off because it appears you will need reimbursement for services in the future. Nor can they charge you more because you have become ill.
However, your fees will go up when rates are raised across the board. There is no such thing as long-term health insurance that remains the same over the course of a lifetime, as in the case of some life insurance policies. When it is time to renew your long-term heath policy, you can bet on an increase in rates.
Questions to Ask Before Purchasing a Plan
When signing a legal document such as a long-term care policy, it is a good idea to have an insurance expert look it over. But there are always things to look for and questions to ask. Some of the details to consider are:
- What conditions are required so that the company will not cancel the policy?—Two conditions are always required to maintain your policy: you must answer all questions about your health truthfully, and you must pay your premiums on time. If either of these conditions are not met, the company can cancel your policy.
- What health conditions are not covered?
- What does the policy pay for?
- Is there a waiver of premium?—This waiver means you will not have to pay the monthly premium when the insurance is paying for your care. Be sure to find out how many days you have to be in care before the waiver takes place (generally 90 days).
- Does the policy pay more as prices increase?—Policies that have this feature may cost more.
- What is the waiting period, if any, before the insurance company begins paying?
- Do you get money back if you do not use the policy or cancel? Ask for specific information about cancelling a policy.
- Which facilities are covered?—Some plans are specific.
- What will the policy mean for my taxes?—Generally, the government does not permit health insurance payments to be taxed, and depending on how much you spend on medical care each year, your premiums can reduce what you pay in taxes. Check with your accountant or other qualified person.
- How is the insurance company rated?—There are many services that look into the finances of insurance companies. Some are online.
- Are you already covered for some kinds of care under another policy or plan?—Compare what you have with what you are buying and try not to duplicate coverage.
Where to Go for Help
Every state has rules for insurers, methods for filing complaints, and an office to help consumers. Check with your state’s department or division of insurance. You can find their contact information through the
National Association of Insurance Commissioners
America's Health Insurance Plans
National Association of Insurance Commissioners
Guide to long-term care insurance. USA government website. Available at:
http://publications.usa.gov/USAPubs.php?PubID=5879#whatelse. Accessed August 12, 2014.
Frequently asked questions. New York State Plan Ahead NY website. Available at:
http://planaheadny.com/faq.htm. Updated July 2014. Accessed August 16, 2012.
Long-term care insurance facts - statistics. American Association for Long-Term Care Insurance website. Available at: https://www.aaltci.org/long-term-care-insurance/learning-center/fast-facts.php. Accessed August 12, 2014.