The improvement in medical care and healthier lifestyles are making people live longer. Because of this, more of us will need some form of long-term care in our later years. As a result, the cost of long-term care has been rising. Wharton estimates nursing home costs will increase by 4.7% and home health care by 6.9% by 2030.
Many seniors will receive some long-term care services from relatives, friends, or neighbors. However, many others will need professional help, whether in their home, an assisted-living facility, or a nursing home. There are different ways to pay for these types of long-term care. If you are able to plan well in advance for your long-term care needs, long-term care insurance could be a good option.
Traditional Long-term Care Insurance
Traditional long-term care insurance policies are similar to health, home, or auto insurance policies. You typically pay the insurance company regular premiums to keep the policy in effect and file claims. If you need them to pay for services your policy covers.
Like health insurance policies, you can choose the amount and types of coverage you want your long-term care insurance policy to cover. Policies state how much reimbursement you can receive on a daily or monthly basis over a certain number of years or up to a lifetime maximum. You may be allowed different amounts depending on the care you are receiving, such as care in your home or nursing home.
Another policy feature you may get to choose is the waiting period between when you start needing care and when you start receiving benefits. Ninety days is a typical waiting period; however, you can pay more to start receiving benefits after 30 days, or you can pay less and wait 180 days before benefits start.
What Long-term Care Insurance Covers
The long-term care insurer will dictate what they will cover and what they won’t cover. Some conditions are often not covered by insurers, such as alcoholism and drug addiction. Some preexisting conditions, such as heart disease or cancer, may not be covered right away. If you have a preexisting condition, find out if the insurer will cover needs connected to that condition before you sign up.
Generally, you can be eligible for benefits when you can no longer perform a certain number of daily living activities. This can be such as eating, dressing, getting into and out of chairs and beds, bathing, and using the toilet. Often you won’t need to pay premiums while you are receiving benefits.
Usually, you’ll lose your coverage if you stop paying your premiums before you need to receive benefits. Unfortunately, you don’t get your premium payments back if you never use the coverage. The insurance company keeps the money.
Many long-term care policies these days are combined with other benefits, such as life insurance. These policies are referred to as hybrid or linked-benefit policies. For this type of policy, you will likely pay a lump sum or several fixed annual payments.
With a hybrid policy, you will get coverage similar to what you would get with a traditional policy. In addition to an amount of life insurance that will go to your heirs if you don’t use the long-term care benefits. If you do need to use the long-term care benefits, the life insurance payout would be reduced or eliminated. This extra flexibility usually comes with a higher premium.
Consult with a Professional
There are many factors to consider before committing to a long-term insurance policy. You may determine that you don’t even need one. Do an ample amount of research and talk with an insurance professional or an elder law attorney.
Our law firm is dedicated to informing you of issues affecting seniors who may be experiencing declining health. We help you and your loved ones prepare for potential long-term medical expenses and the need to transition to in-home care, assisted living care, or nursing facility care. Contact our office today to learn how we can help you afford the right level and best quality of long-term care.
This article offers a summary of aspects of elder law. It is not legal advice and does not create an attorney-client relationship. For assistance, please contact our Ruston, LA office by calling us at (318) 255-1760.