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Buying Long-‐term Care Insurance
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What does LTC Insurance cover?
Unlike traditional health insurance, long-‐term care insurance is designed to cover long-‐term services, including personal and custodial care in a variety of settings such as your home, an assisted living facility and/or nursing home.
Long-‐term care insurance policies reimburse policyholders a daily dollar amount (up to a pre-‐selected limit) for services to assist them with activities of daily living such as bathing, dressing, or eating. You can select a range of care options and benefits that allow you to get the services you need, where you need them.
What is LTC Insurance?
Most policies sold today are comprehensive. They typically allow you to use your daily benefit in a variety of settings including:
o Your home o Adult day care centers o Hospice care o Respite care o Assisted living facilities o Alzheimer’s care facilities o Nursing homes
In the “home” setting, comprehensive policies generally cover these services:
o Skilled nursing care o Occupational, speech, physical and
rehabilitation therapy o Help with personal care, such as bathing
and dressing. Many policies also cover some homemaker services, such as meal preparation or housekeeping as long as it is in conjunction with the personal care services you receive.
Plans typically will pay the costs of your long-‐term care for two to five years. But, these insurance policies can have limits or maximums on how long or how much they will pay.
It costs less to buy coverage when you are younger. The average age of people buying long-‐term care insurance today is about 60. Qualifying with good health drives most to look into buying between the ages of 55 and 64.
People with certain conditions may not qualify for long-‐term care insurance. Common reasons why you might not qualify include: Diabetes with insulin, osteoporosis, neurological conditions, strokes or mini-‐strokes or internal cancers in the previous 5 years.
If you buy your long-‐term care insurance before you develop one of the health conditions listed above, then your policy will, most likely, cover the care you need for that condition.
Good to know:
Go to www.CMCretirement.com and click on the “LTC Education” link to see videos, print fact sheets and more.
See the “Buying Short-‐term Care” fact sheet for some lower cost options.
Buying your policy
Before you buy You should consider a number of things before purchasing LTC coverage. o How soon? Elimination periods dictate how soon a policy
will begin paying benefits. Will it begin on the first day, on the 60th day or maybe the 90th?
o How much? The daily or monthly benefit should be comparable to the current cost in the market. Also, ask about inflation protection.
o How long? The length of coverage will likely be between two to four years. Ask about maximums and how “pools of money” work.
Other things to remember include buying the right blend of coverage. Don’t buy more than you need. You may be able to pay a portion of the bills yourself. While you can usually decrease your coverage, it is much more difficult to increase coverage, especially if your health has declined. Look carefully at each policy. There is not a “one-‐size-‐fits-‐ all” policy. Research and consider different options and talk to a professional before finalizing your decision.
LTC costs
The source for portions of this material comes from www.longtermcare.gov, the U.S. Department of Health and Human Services and the Administration on Aging
Note: This article is designed to provide a simple, easy to understand explanation of basic concepts. Obviously, you will need to refer to your policies and contracts for full details. This site does not intend to give legal, tax or other such advice. Consult the appropriate professional for those details.
www.CMCretirement.com
When owning a long-‐term care insurance policy, the buyer pays a pre-‐set premium. The policy then pays for the services you need, when you need them (up to its coverage limits). On occasion, if the assumptions used to price the policy prove wrong, the insurance company can increase your premiums beyond the pre-‐set amount. Typically, you are not expected to pay premiums while you receive long-‐term care.
The cost of a long-‐term care policy varies greatly based on:
o Your age when you buy a policy
o The maximum amount that a policy will pay per day
o The maximum number of days (years) that a policy will pay
o The maximum amount per day times the number of days determines the lifetime maximum amount that the policy will pay.
Any optional benefits you choose, such as inflation protection, restoration of benefits and/or return of premium features.
Key point: Also, ask about how a company underwrites each policy. One company may appear lower in a quote, but has difficult health underwriting that requires a higher price upon issue.
Getting a good perspective
As difficult as it can be, remember a few things when purchasing LTC coverage: Emotionally speaking, no one wants to think they may need this type of coverage. But, realistically, over 70% of all seniors will need some type of long-‐term care in their lifetime. Also, remember that this topic isn’t about you. It is about guarding your spouse, protecting your family and it’s about securing your estate. Let CMC’s Senior Solutions help you navigate these decisions.
