Long Term Care Insurance

Frequently Asked Questions

Long Term Care Insurance
Long term care insurance can cover costs for senior care such as nursing home care, assisted living, and home healthcare.

What is long term care insurance?

Long term care (LTC) insurance provides coverage for future care seniors may require, such as nursing home care, assisted living, and home health care services. Long term care insurance can be sold as a standalone plan or as a combination plan with a life insurance policy.

What conditions require long term care insurance?

LTC insurance covers someone when they have a physical, or cognitive, chronic condition which causes them to be unable to perform activities of daily living (ADL) for at least 90 days. Examples of chronic conditions include heart disease, diabetes, Alzheimer’s disease, and other long-lasting conditions. LTC policies pay for care needed to ensure seniors with chronic conditions can perform normal daily tasks necessary to live.

What are Activities of Daily Living (ADL)

Activities of daily living (ADL) are everyday tasks including eating, bathing, dressing, going to the bathroom, and basic movements such as going from a bed to a chair. Inability to perform ADLs are commonly used to determine if someone requires long term care. LTC insurance policies typically require that someone be unable to perform at least two activities of daily living before the policy pays out benefits to cover care.

What kind of senior care does long term care insurance pay for?

Long term care insurance policies typically pay out a daily benefit amount, which can be used to pay for care at nursing homes, assisted living facilities, hospice care, respite care, adult day service facilities, or at-home healthcare services.

A “benefit trigger” must occur before LTC benefits are paid out to policy holders. Benefit triggers include:
  • Patient has been diagnosed with a chronic condition and has received care which is diagnostic, preventice, therapeutic, or rehabilitative
  • Unable to perform a minimum of two ADLs
  • Care is expected to last at least three months
  • LTC insurance deductible is met, which can either be a dollar amount or a time period deductible, which is known as an elimination period and can be 90 days or longer

HIPPA defines guidelines for which conditions are considered chronic conditions eligible for LTC. Long term care insurers pay out benefits after a medical professional performs physical or cognitive tests and determines that the patient is chronically ill and unable to perform Activities of Daily Living.

How much is long term care insurance? Is it worth it to buy long term care insurance?

Long term care monthly insurance premiums can vary greatly from person to person and price differences mostly depend on demographics:
  • Age
  • Gender
  • Marital status
  • Tobacco use
  • Health status

Insurance companies offering the LTC policies determine the monthly premium costs for each person by evaluating their demographics and risk profile during the application and underwriting process. Age is the most important factor when determining the cost of a LTC policy.

Although the costs for long term care insurance can vary greatly by person, a general average is about $2,000 per year. Is the cost of LTC insurance worth it? The answer depends on personal preferences and circumstances. Medicare health plans do not cover all senior long term care needs. As people live longer, the likelihood of requiring long term care increases. In addition, the costs of long term care have been steadily rising. Purchasing a standalone LTC policy or a combination LTC & Life Insurance policy may be a prudent decision.

What are Combination policies - Long Term Care Insurance & Life Insurance?

Combination (Hybrid) LTC & Life Insurance policies are, as the name indicates, Life and LTC coverage combined into one policy. There are many different structures to Combination policies, but typically as long term care benefits are paid out, the life insurance basis amount is reduced by the amount of LTC benefits received. Also, the policyholder pays one combined monthly premium which covers both the LTC and Life benefits.

The Life portion of a Combination plan must be Whole, Universal, or Variable Life insurance. Term life insurance plans are not eligible as Combination plans because Term plans do not hold any value after the term period has ended.

One benefit of Combination plans is that if a policyholder does not require long term care, the life insurance benefit amount is fully received by their beneficiaries after they pass away.

What should I consider when comparing long term care insurance policies?

LTC insurance companies have a lot of flexibility in terms of how they structure the benefits of a LTC policy. We recommend fully understanding the policy benefit details before purchasing LTC insurance, but some common things to consider are:
  • Benefit trigger - when LTC benefits are paid
    • The required number of ADLs unable to perform. Typically there is a minimum of two ADLs, but there could be more.
    • Deductible, elimination period, which is typically 90 days but could be longer
  • How much benefits are paid - flat daily dollar amount or Combination plans could be a percentage of the death benefit
  • How long benefits continue. The length of benefit in a combination plan could be affected depending on how benefits coordinate with the Life portion of benefits

Can Long Term Care Insurance be combined with an Annuity?

Yes, in a similar fashion to Combination Life & LTC policies, Long Term Care insurance can be combined with an Annuity directly or as a rider to an Annuity.

What age should you buy long term care insurance?

Mid 50’s is a generally recommended age range for purchasing LTC insurance and locking in a lifetime rate. As someone gets older, the monthly premium cost for LTC insurance rises and insurance companies typically do not offer policies to people over 80.

Which companies offer long term care insurance?

Many different insurance companies offer LTC policies and some of the larger more well known companies include Mutual of Omaha, New York Life, MassMutual, Genworth Financial, and TransAmerica.