Updated September 27, 2021

Are you concerned that you could have trouble paying for long-term care should the need arise? If so, now is the time to develop a plan to handle the cost of long-term care. A long-term care policy may fit nicely into your overall plan for in-home care and care in a long-term care facility.

7 Reasons to Set Up a Long-term Care Policy

  1. Ensure Long-term Medical Care
  2. Stay at Home Longer
  3. Preserve Savings and Assets
  4. More Choices for Medical Care
  5. Remain Financially Independent
  6. Preserve Loved Ones’ Assets
  7. Peace of Mind

Long-term care can be costly. For many people, obtaining a health insurance policy that would cover the cost of long-term care can be expensive. If you have a pre-existing condition of other health issues, an insurance policy might be out of your budget. However, a long-term care policy might provide the benefits you need at a cost you can afford.

What is a Long-term Care Policy?

A long-term care policy does not provide the same benefits as a traditional health insurance policy. A long-term health care policy helps cover the cost of long-term care. This kind of insurance policy can be tailored to meet your specific needs and desires. For instance, a comprehensive long-term care policy may cover a wide variety of services and support—from assisted living care or in-home care to nursing home care or assisted living facilities.

If you are unsure whether a long-term care insurance plan is right for you, you may want to meet with a financial advisor or an attorney to discuss the costs, benefits, and options for a long-term policy.

7 Reasons to Set Up a Long-term Care Policy

There are several reasons why a long-term health insurance policy may be right for you. If you are not familiar with the benefits of a long-term care insurance policy, keep reading to learn more.

1. Ensure Long-term Medical Care

When you consider that most seniors will require some type of assisted living care, purchasing a long-term health insurance policy can be a wise investment for your future. The cost of long-term health care has skyrocketed in recent years. In 2016, the average cost of a private room in a nursing home was approximately $100,000 per year. The average cost for an adult day healthcare center was $68 per day, and it costs nearly $21 per hour for a health aide.

Long-term care insurance reimburses you for some of the cost of long-term care. Most insurance policies pay a set amount per day, depending on the type of care required. With a comprehensive plan, you can choose from a variety of long-term care options so that you have quality care regardless of your immediate medical or personal needs.

2. Stay at Home Longer

A long-term policy can pay for the expenses of in-home care so that you can stay at home longer. For many people, remaining at home is a top priority when they develop a long-term care plan. For example, if you are diagnosed with Alzheimer’s disease, your insurance policy may pay for in-home care to help with activities of daily living, then transition into paying for an assisted living facility or nursing home care when necessary.

3. Preserve Savings and Assets

The medical expenses and out-of-pocket expenses associated with nursing home care and assisted living care are expensive. Paying for these expenses can quickly drain your savings. If you do not qualify for Medicaid, you could be required to use your assets to pay for long-term nursing care. A long-term care insurance plan can protect your savings and assets for yourself and your heirs.

4. More Choices for Medical Care

Unfortunately, financial limitations can dictate the choices for medical care that a person might have later in life. If you do not have the income, assets, or savings to pay for certain types of medical care, you might be forced to enter a state-funded nursing home. You may not be able to stay at home as long as you would like if you are unable to afford in-home care. With long-term care insurance coverage, you have more choices, which can increase your quality of care and quality of life.

5. Remain Financially Independent

When you qualify for Medicaid for nursing home care or other care, all or most of your benefit is paid directly to the nursing home or assisted care facility. When this happens, many people feel as if they lose their financial independence. Without a long-term care provider, you may not have the funds to pay for personal expenses. You may be forced to rely on family members to provide personal needs other than the basic needs met by the nursing home or another long-term care facility.

6. Preserve Loved Ones’ Assets

When you don’t have long-term care benefits, your loved ones may need to pay for the cost of long-term care. Medicare does not help with long-term care costs. It will pay for a short stay in the hospital or a nursing home, but Medicare is not intended to pay for long-term care. That’s why long-term care insurance, as part of long-term care planning, can prevent the need for family members to use their own assets, income, and resources to pay for ongoing nursing or assisted care.

7. Peace of Mind

Worrying about the costs of long-term care can be stressful. Having a long-term healthcare policy can give you the peace of mind of knowing that you will have the means to pay for nursing home care, assisted living facilities, in-home care, or general assistance with activities of daily living. Any type of cognitive impairment can result in the need for long-term care. Taking steps now to research long-term care insurance rates can give you a sense of control over your future care.

Long-term Care Policy FAQ

Here are some common questions regarding long-term care policies:

What does a long-term care policy cover?

As with other insurance policies, you can tailor an insurance policy for your needs. You can purchase a long term healthcare policy that provides comprehensive long-term care or a policy that covers only specific types of care.

For example, you can choose a comprehensive policy that would cover numerous facilities and types of care, such as in-home care, nursing home care, associated living facilities, hospice care, adult daycare services, Alzheimer’s disease facilities, and skilled nursing care. Policies may also cover assistance with personal care, dressing, and bathing, as well as physical therapy, speech therapy, and rehabilitation therapy.

You should read all policy riders and the fine print so that you know what is covered and not covered by your long-term care insurance policy.

How much does long-term care insurance cost?

Long-term care premiums are based on a variety of factors, including but not limited to:

  • Your general health at the time you purchase the insurance policy
  • The optional benefits you choose
  • Whether you choose the option to increase benefits with the cost of inflation
  • The maximum amount the policy pays per day for covered services
  • The maximum lifetime benefits

What does a long-term care policy not cover?

Many insurance companies will not cover services related to a pre-existing condition during an exclusion period. The exclusion period varies by company and policy. Also, if family members provide in-home care services, the policy may not reimburse you for those services.

It is important to read an insurance policy thoroughly, including exclusions, so that you understand what the policy does and does not cover. You can tailor policies to fit within your budget for long-term care insurance costs so that you can purchase a bare-bones policy, but the policy may not cover much except a few long-term care services.

How does a long-term care policy work?

Most policies require that you file an insurance claim and provide medical documents and evidence of the costs associated with the covered services to receive benefits. You may also be required to pay for long-term care services for an elimination period, such as for the first 90 days, before your benefits apply. Also, your long-term health insurance policy might require that you meet other conditions, such as needing help with at least two activities of daily living, before the policy will pay benefits.

Each company’s policy for filing a claim may vary slightly. You should receive a claim packet from the insurance provider when you contact the company to file a claim.

Be sure that you understand what services are covered. Some policies require you to use a state-licensed agency or a long-term care facility to provide services for the services to be covered.

How long does long-term care insurance last?

The length of the insurance policy depends on its terms. The policy could pay for one or more years, depending on the services being provided. In most cases, a long-term care policy has a maximum lifetime benefit.

When is the best time to buy long-term care insurance?

The best time to buy long-term care insurance is when you are in relatively good health. Once you have certain health conditions, long-term care policy costs increase. As you age, the cost of long-term care insurance increases. Many individuals begin shopping around for a qualified long-term care policy when they are in their mid-50s, but there is not a set age for discussing long-term care planning.

What types of policies are available?

There are several types of policies available for long-term care insurance. You can choose a comprehensive long-term care policy that covers many different situations and services, or you can choose a policy that is tailored to your needs and budget.

Long-term care health insurance policies are offered as individual plans by various insurance companies. To ensure that you are receiving a quality insurance product, you want to deal with a credible insurance company that has a good reputation. You can also check with your state’s insurance department to confirm that you are dealing with a reputable long-term care insurance company.

You might also be able to purchase insurance for long-term care through employer-sponsored plans, state partnership programs, various service or professional organizations, and through a group long-term care provider. Anderson Advisors can help you review your options for long-term care insurance and develop a plan that meets your needs and protects your assets and family.

Do You Need Help with Long-term Care Protection?

Long-term care planning is an important part of retirement planning and estate planning, especially if you plan for early retirement. You need to ensure that you have the finances available for any situation, including incapacitation. One of the estate planning mistakes to avoid is failing to plan for long-term care and incapacitation.

Anderson Advisors provides comprehensive legal services related to retirement planning, trusts, estate planning, asset protection, and long-term care protection. Contact our office online or by calling 800-706-4741 to schedule a consultation with an experienced advisor.

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