Long Term Care Insurance

What is Long Term Care Insurance?

It is designed to help pay for medical and non-medical care services that would otherwise be paid out-of-pocket. Some policies cover nursing home care, while others include coverage for an entire range of services such as care in an adult day care center, assisted living, medical equipment, and formal and informal home care. Long term care policies pay benefits for you and anyone else you designate, such as your spouse, parent or child. Plus, these policies either pay a fixed amount or reimburse you for services provided.

Individual long term care insurance policies are purchased by people whose employers do not offer a group policy. However, individuals whose employers do offer a long term care group policy often supplement them with an individual policy to obtain the most coverage possible, in the event they need long term care assistance.

If you decide that the coverage offered through your employer-sponsored group plan does not adequately address your personal needs, you should contact an independent agent or carrier.

Do I Need Long Term Care Insurance?

Similar to home, health and auto insurance, long term care insurance is available to help protect you, your family and your assets.

Family members are under pressure to help care for a growing number of elders, and resources to pay for long term care are declining. In fact, according to Family Caregiver Alliance®, 6 to 7 million unpaid relatives and friends care for an estimated 78 percent of elderly Americans, which can be costly – as well as emotionally taxing.

If you or your spouse, parent or child eventually needs long term care services, the financial burden can be quite steep.

How is Long Term Care Insurance Different?

Major medical insurance or disability insurance does not protect you and your family in the same way that long term care insurance can. In fact, health insurance plans generally cover about 30 days of recuperative time, while a long term plan covers about two years or more.

Furthermore, disability insurance replaces only your salary at the time of injury, and the policy holder – who is dependent on disability insurance – pays out-of-pocket for any ongoing long term care.

Medicare is even more restrictive, and should not be considered your sole resource for substantial long term care expenses. This is because it reimburses only up to a maximum of 100 days – with the average repayment of expenses being only 28 days.

How Much Does Long Term Care Insurance Cost?

Premiums vary, depending on your age and health status when you purchase the policy and how much coverage you desire. The cost of care, especially in nursing homes and assisted living facilities, varies from state to state. Generally, you must be in good health when purchasing a policy, so it may be better to buy long term care insurance at a younger age, when you are more likely to be healthier and premiums are lower.

Long Term Care Statistics

  • Long term care costs are expected to double by the year 2025.
  • Without private insurance or public program coverage, the high cost of long term care is unaffordable for the majority of Americans.
  • Ten percent of those who enter a nursing home will remain there for five or more years.
  • An estimated 70% of Americans over the age of 65 will eventually need long term care.