Long-term Care Insurance for Seniors

As individuals age and their health care demands evolve, financial planning for senior care becomes increasingly critical. One tool in our arsenal for is long-term care insurance, designed to provide financial support for seniors who require extended medical assistance and personal care. So whether you're thinking about senior housing or assisted living, it's important to understand how to leverage long term care insurance in your planning.

What is long-term care insurance?

Long-term care insurance (LTC or LTCI) for seniors is a kind of "assisted living insurance" that will cover a variety of expenses associated with long-term stays in assisted living facilities, like a hospital, nursing home, or respite center.

Generally, long-term care insurance covers additional expenses not covered by Medicare or Medicaid and can be used as supplemental insurance for seniors. But, if assisted living insurance exists, is it easy to acquire?

Although it's not a widely used type of insurance policy (about 10 percent of Americans currently purchase it), an LTCI policy can help protect against the rising costs of long-term care and keep you from being burdened with any unexpected medical expenses afterward.

Who is eligible for long-term care insurance?

Qualifying for an LTCI policy will depend on your health, age, and current living situation. In general, the younger and healthier you are, the more likely you will be able to purchase an inexpensive policy.

Long-term care health insurance premiums are generally less expensive at a younger age. Shopping for a policy between 60 and 65, or beginning at age 55 for couples, may get you the combination of monthly affordability and lower total investment.

Though assisted living insurance is possible, there are a few conditions that may affect whether or not you qualify for long-term care insurance. Here are a few factors that will influence your monthly premiums:

• A pre-existing health condition
• Poor health
• Being at an "at-risk" age

Note that sometimes, the cutoff age is 75 for long-term care or what traditional health care insurance covers. That's why it's best to err on the side of caution and apply for assisted living insurance on the earlier side.

Moreover, the following are some commons reasons why your family member or loved one may be unable to purchase long-term care or traditional health insurance now:

• They are currently using long-term care services
• They have Alzheimer’s or another form of dementia
• They have AIDS
• They have Parkinson’s Disease, multiple sclerosis, or another progressive neurological condition
• They have suffered from a stroke in the past year or two

What are the types of long-term care insurance policies?

Long-term care insurance policies can be broadly categorized into several types, each designed to suit the diverse needs and preferences of older adults and their families.

Traditional long-term care insurance policies

Traditional policies, the most common type, provide comprehensive coverage for numerous long-term care services, such as nursing home care, assisted living, and home health care, with predetermined daily or monthly benefits.

Hybrid long-term care insurance policies

Hybrid policies, also known as combination or linked-benefit policies, combine the features of a life insurance policy and long-term care (LTC) insurance into a single product. Though more expensive than a traditional LCTI policy, the hybrid model has gained popularity in recent years as they address some of the concerns associated with traditional LTC insurance, such as the "use it or lose it" nature of the coverage.

A hybrid policy typically requires a one-time lump-sum payment or a series of premium payments over a fixed period in exchange for both life insurance and LTC coverage. In the event that the policyholder requires long-term care, the policy provides a predetermined monthly or daily benefit for a specified duration.

One of the key advantages of hybrid policies is the guaranteed death benefit. If the policyholder passes away without exhausting the LTC benefits, their beneficiaries receive the remaining balance as a tax-free death benefit. Additionally, many hybrid policies offer a return of premium feature, allowing policyholders to withdraw their paid premiums if they change their minds or no longer want the coverage.

Short-term care insurance policies

Short-term care insurance (SCTI), also known as recovery care or convalescent care insurance, is designed to provide coverage for a limited period, typically ranging from 90 days to one year. These policies primarily cater to seniors who plan on needing assistance due to an illness, surgery, or other health setback, during which they may require extra support in their day-to-day activities. This type of policy is generally more affordable and easier to qualify for than traditional long-term care insurance policies, but still provides a range of benefits, such as coverage for nursing home stays, assisted living communities, home health care, and adult day care services.

This type of policy is often easier to get, as it has simpler underwriting processes and shorter elimination periods (the duration between the initiation of a claim and the commencement of benefit payments), resulting in quicker access to the required care. However, the limited-term nature of these policies makes them unsuitable for individuals seeking an extensive coverage period.

Partnership long-term care insurance policies

Partnership policies are a unique type of long-term care (LTC) insurance designed to encourage individuals to invest in private LTC coverage while also providing access to Medicaid for extended care needs. These policies are a result of collaborative agreements between state governments and private insurance companies under the 2005 Long-Term Care Partnership Program.

One of the key features of a partnership policy is the Medicaid Asset Protection, which allows individuals to retain more of their assets if they eventually need to apply for Medicaid. Generally, to qualify for Medicaid's long-term care benefits, an individual must meet strict income and asset requirements, often necessitating the "spend down" of assets to meet the eligibility criteria. However, with partnership policies, for every dollar paid out in LTC benefits, the policyholder can protect an equal amount of assets from Medicaid's spend-down requirement. This way, individuals can preserve their assets for their beneficiaries while still accessing Medicaid benefits when their private LTC insurance coverage is exhausted.

Another option: annuities with long-term care rider options

In the search for aid with assisted living costs, annuities are a great option. Annuities are conservative investments issued by insurance companies that can help build a guaranteed income stream or supplement retirement savings.

A long-term care rider is an optional benefit you can add to an annuity that helps cover long-term care expenses.

How much does long-term care insurance really cost?

As with any investment, there is careful research to be done before purchasing an LCTI policy. The annual premiums for policies can vary by policy type and policy holder, so it's important to understand the range of options and their associated costs.

• Traditional policies: Annual premiums for traditional long-term care insurance policies range from $1,500 to $5,000, depending on selected coverage options, benefit amounts, and the policyholder's age and health status. The cost of these policies generally increases the older the policyholder is when purchasing coverage.
• Hybrid policies: These policies tend to have higher premium costs compared to traditional policies due to the combined life insurance and long-term care benefits. Hybrid policy premiums can range from $3,000 to $10,000 per year or require a one-time lump sum payment of $50,000 and upward.
• Short-term care policies: As these policies cover a limited duration of care, their premiums tend to be lower compared to traditional long-term care insurance policies. Annual premiums for short-term care policies can range from $1,000 to $4,000, with cost variations based on coverage choices and personal factors.

As you're evaluating the cost of an LCTI policy, it's important to keep in mind the rising assisted living costs over time. Genworth has a great tool that allows you to see projections for senior care costs over the next fifty years.

How to find long-term care insurance providers

There are a variety of long-term senior care insurance companies on both the federal, state, and local levels. Additionally, many seniors opt to carry private insurance plans for LTCI.  Here are some of the major long-term care insurance providers:

• Brighthouse Financial
• Nationwide
• Northwestern Mutual
• Metlife
• State Farm
• Mutual of Omaha
• New York Life

What to look for when purchasing an LTCI policy

Whether you are interested in purchasing assisted living insurance coverage to pay for assisted living, respite care, or as a safety precaution, there are a few things to consider:

Only buy as much as you need

If your loved one is healthy, won’t need a long respite stay in a skilled nursing facility or nursing home, or has the income to pay privately for many of their services, there’s no reason for them to buy more insurance than they need. However, it's vital to ensure that the insurance they purchase covers everything they require. Here's what to look for when considering assisted living insurance:

Study the details of each policy

This may go without saying, but be sure to compare and contrast the details across several policy types and providers. Some LTCI policies will only cover certain types of long-term care. More than that, living insurance may refuse to cover respite care or other assisted living expenses in senior living alone. Therefore, it's crucial to understand the ins and outs of each policy so that you have the tools to compare and contrast.

Remember, it's key to ensure that you and your loved ones are getting what they need, whether it's from skilled nursing facilities or nursing homes.

Lastly, it could even be helpful to enlist the support of an insurance agent to better understand an insurance policy.

Take note of the benefit amount, benefit period, and elimination period

The benefit amount is how much the LTCI policy will cover assisted living care on either a daily or monthly period. The benefit period is the length of time the policy will pay this amount, usually measured in years.

The elimination period is how long you or your loved one must pay for expenses before the policy kicks in. This is similar to a regular health insurance deductible.

Look for non-renewal and/or cancellation guarantees

Before choosing any life insurance policy, however, you should require that it comes with a guarantee it cannot be terminated if you or your loved one experience a sudden deterioration in health conditions. to find assisted living insurance

Yes, some insurance policies cover long-term care. Finding those insurance policies that cover community living and long term care costs is important. Consider the following resources to find a policy that fits your needs.

Use an insurance specialist

One of the easiest ways to purchase an LTCI policy is to do it directly from a provider. Find out which providers offer this type of insurance by contacting your state’s Department of Insurance.

Use Medicaid or Medicare

If you meet the age and financial requirements, you may be able to purchase an LTCI policy through a partnership program with either Medicaid or Medicare.

Use your employer’s insurance

In many cases, you may be able to find a policy through the same insurance company that you already have through your employer. This may also make it easier to qualify for an LTCI policy.

Can long-term care insurance cover assisted living?

Finding suitable insurance coverage for an assisted living facility, nursing home, or other long-term care arrangement is a crucial step in securing peace of mind for yourself or your loved ones. By considering important factors such as cost, coverage options, and insurance providers, you can make an informed decision that suits your specific needs.

Remember, it's never too early to start planning for the future and protecting your well-being. This is a highly personal decision, so taking the time to explore your options and find the right insurance company for your needs will ensure that you or your loved ones receive the care and support they need.

Ultimately, this will allow you to focus on what truly matters—cherishing each moment and enjoying a fulfilling life.