- Health Insurance

Long Term Care Health Insurance

As people age and experience difficulty handling daily living activities, and medical advances mean that more people are able to survive critical illness, serious injury and major surgery, increasing numbers of people require long term care. Medicare and health insurance do not pay for most long term care expenses, so long term care insurance is available to help pay for the escalating costs of this type of personal, medical and residential care.

Long term care insurance covers care in a variety of settings, including assisted living facilities, adult day cares, nursing homes and licensed care services such as nursing, physical, occupational and speech therapy and care from health aides.

Long term care policies vary in the coverage offered, including: the maximum daily benefit amount, the length of coverage (usually between two years and unlimited) and the wait period before your coverage starts. Longer coverage, a shorter wait period and a higher daily benefit will lead to higher premiums. Many policies include a “waiver of premium” (where you stop paying premiums when your coverage starts) and are guaranteed renewable, even if you have developed medical conditions in the meantime. Be aware that premiums are likely to increase over time. Some plans offer “inflation adjustment” which increases your coverage by a set percentage annually to help offset the cost of inflation. Some states offer tax incentives when you purchase long term care insurance.

Long term care policies vary in the conditions they set for coverage to start. Most policies assess eligibility according to your inability to perform basic activities of daily living, including: bathing, dressing, eating, getting on and off the toilet, continence and transferring (getting in and out of bed). Some policies will require you to meet two of these conditions, while others will need three. If bathing is included as one of the eligibility conditions it will be easier for you to meet them. The most comprehensive and expensive policies provide coverage if you suffer from a cognitive impairment such as Alzheimer’s, even if you are still able to handle most basic activities.

Many people purchase long term care insurance between the ages of 50 and 55, before experiencing serious medical conditions. Most insurers will not sell you a policy if you are over 85 or have a pre-existing serious medical condition, such as heart disease or diabetes. Premiums will vary depending on your age and the coverage offered by the policy. Younger policy holders will pay much lower premiums, but for a longer time.

The amount of long term care coverage you need will be the difference between what you can afford to pay from your income and assets and the cost of residential care. This will be an approximate calculation given unpredictable rises in the cost of medical care.

When choosing a long term care policy, check the types of services and facilities it includes, the coverage it offers and the conditions necessary for coverage to start.