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Long-term Care Insurance

Costs and considerations

Long-term care coverage can be an excellent way to control the costs of elder care as this type of insurance generally covers the cost of home health care, community-based programs and assisted living services when provided in a special residential setting. Home health care services covered by long term insurance include daily activities such as cleaning, eating and bathing. Community programs covered by long term care insurance include programs such as adult day care. Assisted living services covered by these types of policies include meals, help with daily activities, and health monitoring. Because long-term care coverage premiums increase with age, and because insurance companies may be less likely to insure aging individuals, it is recommended that individuals purchase these types of policies by middle-age.

There are many factors to consider prior to purchasing long-term care coverage. For a healthy 65 year old, premiums can range from $2,000 to $3,000 annually. Some long-term care insurance policies can cost as much as $10,000 annually for those over age 65. Premium increases are not uncommon and should be anticipated and included in future financial planning. While these policies are designed to pay the daily or monthly expenses of an individual with a long-term illness or disability, long-term care coverage often has benefit restrictions and limitations. It is vital, before purchasing long-term care insurance, that you understand all of the terms of the policy. If there are any questions as to the policy’s benefits or coverage, it is advisable to seek a professional to assist in untangling and explaining vague or complicated terms.

Other factors to consider include: type of long-term care coverage desired, daily or monthly benefits, the benefit period, whether there is an elimination or waiting period, what kind of inflation protection is offered, and if a nonforfeiture benefit is available. Individuals may choose from policies that have only nursing home care coverage, only home care coverage or a mixture of nursing home care, home care, assisted living care and adult day care. If the cost of these programs exceeds the daily or monthly benefit allotted by the policy, the remaining balance will have to be paid out-of-pocket. It is also important to determine if only one deductible has to be paid for the life of the policy, if a hospital stay is required before becoming eligible for long-term care coverage benefits, and if the policy is renewed as long as the premium is paid.