Six Things You Should Know about Long-Term Care Insurance

Approximately 70% of adults in the US will need some form of long-term care—either as they age, or as a result of an illness or injury. Long term care is categorized as a wide range of ongoing medical and non-medical services and assistance with daily living activities. These could range from in-home nursing care to assistance with dressing, bathing, and using the bathroom.

This kind of care is expensive—and can be difficult to find coverage for. Long term care insurance is one way to cover the costs, however. Here are a few things you should know about long term care and the insurance that covers it.

Medicare doesn’t cover long-term care

Whether you should buy long-term care insurance or not is a gamble—like the decision to purchase any insurance.

Medicare will pay for skilled nursing care, either in a hospital or medical facility or at home. But this is only for medically necessary care for a brief period of time. Ongoing assistance for activities that healthy people usually do for themselves—such as dressing, grocery shopping, bathing, and so on—are usually not covered. Some Medicare Advantage Plans, which are Medicare coverage plans administered by a private insurer, may cover some of these things in a limited way.

Few qualify for Medicaid coverage

In many states, Medicaid will pay for nursing home care, long-term care at home, and other services for people who qualify. The problem is that to qualify, you need to meet very strict income restrictions. Many people who can’t afford long term care on their own wind up being forced to “spend down” to qualify for Medicaid coverage—which entails spending all their income and selling most of their assets to qualify. Still, if you qualify for Medicaid, buying long-term care insurance is probably not the best choice for you.

Some states offer partnership programs

In some states, people with qualifying long-term care policies can qualify for Medicaid to assist in paying for long-term care after they’ve exhausted their coverage—without having to “spend down.” The amount Medicaid will pay is often tied to the amount of benefits the person had under the long-term care policy—for example, if the policy offered $500,000 worth of coverage, Medicaid will allow the policyholder to keep $500,000 worth of assets after using up their long-term care coverage—and still qualify for Medicaid.

Long-term care policies only kick in after a certain number of days

If you buy a long-term care policy, it won’t start covering your costs right away. Most have what’s called an “elimination period”—sometimes up to 180 days—that you must pay for your care on your own before the benefits start coming in. The shorter the elimination period, the higher your premium.

The younger you buy a long-term care policy, the cheaper it is

Many experts recommend spending no more than 5% of your monthly income on long term care coverage—but that’s easier said than done. Long term care insurance can be expensive. You can reduce the rates by buying your coverage earlier, by accepting a longer elimination period, or by buying coverage for a limited period of time rather than indefinite coverage.

You still have to qualify for the benefits

Many long-term care policies won’t guarantee coverage unless you legitimately can’t perform a certain number of daily activities on your own without assistance. The benefits may range from $50 to $250 per day.

Whether you should buy long-term care insurance or not is a gamble—like the decision to purchase any insurance. Some people never need it. However, there are a few factors that may make it likely you will. For example, women tend to live longer than men and may have more need of long-term care as they age. Those with chronic conditions or with a family history of such conditions are more likely to need it, as are those who are unmarried and without a strong family support network. Look into your long-term care options earlier rather than later—and you’ll be more likely to get a good deal on your premiums.