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6 Crucial Considerations for Long-Term Care Insurance

You have health insurance to cover preventive care and illnesses, auto and home policies to protect major investments, and life insurance to take care of loved ones. What about long-term care insurance?

Long-term care insurance was designed to cover medical costs associated with aging. Coverage ranges from home modifications and in-home nursing care to assisted living and nursing home facilities. More than 8 million Americans have purchased long-term care insurance policies, according to the American Association for Long-Term Care Insurance (AALTCI), a nonprofit member organization for long-term care providers.

Six things you need to know about long-term care insurance:

1. Know when to buy long term care insurance.

If you’re young, you might think you don’t need long term care insurance — you’d be surprised. While you might not be thinking about a nursing home, that doesn’t mean it’s too soon to shop for long-term care insurance. AALTCI reported that more than 80 percent of policies are purchased by those ages 45 to 64.

The earlier you purchase coverage, the easier it will be to qualify and the less you’ll pay for premiums.

A 2017 America’s Health Insurance Plans report found that annual premiums of $2,624 for people ages 55 to 64  increased to $5,241 for people over 75. AALTCI found that the percentage of applicants who were denied coverage went from 14 percent for people under 50 to 44 percent for people ages 70 to 79.

2. It can improve care options.

Too often, long-term care insurance is thought of as “nursing home insurance,” but that’s just one of its many benefits. This coverage can also include home modifications such as wheelchair ramps and bathroom grab bars as well as in-home assistance to help with activities like bathing and dressing — all of which can help keep you out of a nursing home.

3. It protects your savings.

Paying out of pocket for long-term care can deplete your nest egg quickly. A home health aide will set you back more than $46,000 per year and the cost of a semiprivate room in a nursing home tops $80,000 per year, according to Genworth’s annual Cost of Care survey. Long-term care insurance will cover a significant portion (or all) of these costs.

4. It’s different from health insurance.

Your health insurance will cover the cost of falling and breaking a hip, but it won’t cover the help bathing or dressing that might be required to recover. Long-term care insurance was designed to pay for medical costs that aren’t covered by conventional health insurance.

5. Coverage varies.

You should shop around for coverage — and read the fine print.

When comparing policies, look at the premiums and coverage maximums as well as the elimination period, which refers to the number of days you have to pay for care out of pocket before benefits kick in.

6. It’s not right for everyone.

Ultimately, you should answer the question, “is long-term care insurance worth it?”

This will require some analysis on your part, because the answer is different for each person. Long-term care insurance was designed for people who can afford the premiums, but not the cost of a long-term care.

Those who lack the income to purchase coverage (and will receive Medicare benefits to cover their long-term care) as well as those who can afford to cover long-term care out of pocket are not the market targets for long-term care insurance.

Comparing policies and budgeting for premiums can seem overwhelming, but compared to the stress of covering the cost of expensive long-term care, the effort can be considered time well spent.

Unsure about your long-term care needs? Our calculator can help you determine how long your current assets might last.