If we had known about long-term care insurance before she got sick, it could have helped us immeasurably. So what is it and how can it help?
Long-term care insurance is an insurance policy you pay for that helps ensure you’re covered for long-term service and support. Unlike many traditional health insurance policies, long-term care covers things like personal and custodial care for help in your home or at a care facility. In other words, if you have a chronic illness, disability or another condition that requires help on a daily basis, long-term insurance will help cover the costs associated with those conditions.
Types of Services Covered by Long-Term Care Insurance
- Nursing home – a facility that provides you with 24-hour health care, rehab and personal care services.
- Assisted living – an independent living facility that provides personal care and other personalized services available when you need them.
- Adult day care services – a program that provides health and social support in a supervised setting during the day.
- In-home care – a certified professional who comes to your home (or lives in the home) to provide services like bathing, grooming or physical therapy, or help with housework.
- Home modifications – adaptations made to your home to allow for things like wheelchair ramps or grab bars.
Paying and Qualifying for a Long-Term Care Policy Depends on Many Factors
- Your age and health at the time of purchase. Most policies cost less if you purchase them when you’re younger and in relatively good health. Most financial advisors recommend buying a policy in your 50s or early 60s.
- The max amount you choose for your policy to pay per day, and the amount of days or years it will pay.
- Any optional benefits you choose to add to the basic plan. Keep in mind, however, most policies offer different coverage options. Since it’s hard to predict what your long-term care needs will be, you might want to consider buying a policy with flexible options.
Like traditional insurance, these policies have limits on how long and how much they will pay. Most companies offer policies that will pay for your long-term care indefinitely, while others will only pay up to five years.
Qualifying for a long-term care insurance policy hinges on medical underwriting. You may not qualify if you’re in poor health or already receiving similar benefits through Medicaid. If you have any preexisting conditions, you may be not eligible for long-term care insurance. However, if your policy is approved, be aware that your payments for care may be withheld for a predetermined amount of time. Most insurance companies will provide an informal review to determine your eligibility, so you will never be left in the dark.
Once you’ve passed the medical underwriting approval process, there are certain conditions that must occur before you can start receiving long-term benefits. A good rule of thumb is that benefits will begin when you need help with at least two activities of daily living – things like bathing, eating, dressing, walking, etc.
The most important thing to remember when picking a policy is to choose one that allows a cognitive impairment as a trigger. For example, a loved one with Alzheimer’s may be able to do day-to-day physical activities, but may need help to do them cognitively.
Things to Keep in Mind About Long-Term Care Policies
While you may be able to see the benefit of having a long-term policy, consider your ability to afford it and the fact that many premiums may rise over the years. If your income is low now, you may qualify for Medicaid, which covers these types of costs, when you’re at a point where you need long-term care.
The good news about long-term care policies is that they are considered “guaranteed renewable” which means they cannot be canceled or terminated due to your age, physical condition or mental health.
Please consider contacting a financial adviser or a lawyer who specializes in elder law to help advise you about the pros and cons of purchasing long-term care insurance based on your current financial situation.
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