Long-term Care Insurance
Long term care coverage.
Good to have if you need help.
Long-term care insurance doesn't cover medical care for people with disabilities or long-term illness. It covers the related expenses that health insurance doesn't: In-home help, adult day care, assisted living services, visiting nurses, even care in a nursing home.
So what should you know and look for?
Long-term care is expensive. You could easily spend your life's savings on long-term care in a short amount of time.
Medicare doesn't cover long-term care. Medicaid will, but only after you've already spent most of your money, leaving little to live on.
Don't wait to buy. If you wait until your 70s - or later - you'll likely be deemed high risk. You'll either be denied or charged astronomical premiums. Consider getting it while middle-aged - and premiums are lower.
Consider the cost. If the premiums will lower your standard of living now, or you'll have difficulty affording them in the future, this coverage may not be for you.
Coverage. You can select nursing-home care only. Home-care only. Or mixed-care that includes nursing homes, assisted living, adult day care and maybe even care in your home by a friend or family member.
Benefit amount. The daily or monthly benefit is the maximum the coverage will pay for each day or month you are covered. If your expenses are higher, you'll be responsible for the difference.
Benefit period. This determines how long your coverage lasts. Choose as little as two years, or as long as the rest of your life.
Waiting period. The waiting period is like the deductible on your auto insurance. The longer it is, the lower your premium. But the more you'll spend on care, yourself. Waiting periods are usually from 0-100 days.
Inflation protection. With health care costs rising every year, a policy without inflation protection is unlikely to provide sufficient coverage by the time you actually need it. There are two types of protection: right to add coverage later and automatic increases.
Non-forfeiture benefit. If you have this benefit, your policy will continue to pay for your care even if you stop paying the premium. It can add 10%-100% to the cost of your policy.
As with any insurance policy, the details are what make or break the coverage.
Be sure your policy:
- Clearly explains when you are eligible for coverage and how it is determined.
- Does not require hospital stay before receiving benefits.
- Cannot be cancelled as long as you pay the premium.
- Lets you stop paying premiums once you begin receiving benefits.
- Has one deductible for the life of the policy.
- Covers pre-existing conditions if you disclosed them when you applied.
- Offers automatic inflation protection on an annual basis, or a guaranteed right to increase your benefit.
- Allows a downgrade in coverage if you cannot afford the premium.
- Covers dementia.
- Provides at least one year of nursing care and home health care coverage.
- Allows cancellation and full refund for any reason within 30 days.
