Long-Term Care Benefits (And Its Cons)

Annually, over 8.3 million people across the country receive long-term care (LTC). This figure is set to increase drastically by 2050, leaving many with questions about how to navigate the care system and the services within it.

Are you considering long-term care benefits but unsure how to navigate the process? Or perhaps you’ve heard about this type of insurance, but don’t even know what it means or includes?

Long-term care insurance can be a little bit tricky to understand at first, so let us take away some of that uncertainty and confusion. In this comprehensive guide, we’ll explain the positives and negatives of acquiring long-term care benefits in an easy-to-understand way.

From understanding the nuts and bolts of health insurance coverage to knowing your rights as a beneficiary — we've got everything covered here. Join us on our journey today as we explore the world of long-term care with eyes wide open.

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6 Benefits of Long-Term Care Insurance

Long-term care insurance is a type of insurance meant to cover the costs associated with long-term care services. This includes medical and non-medical services, like home health care and assisted living. It's critical to understand the types and benefits of long-term care insurance before entering into any policy.

The types typically include individual policies paying a fixed daily amount for a specified period. However, you can also find and access policies as group insurance purchased through employers.

The benefits of this type of insurance policy include covering unexpected costs for those seeking long-term care services, reducing out-of-pocket costs for families providing care, and protecting assets that would otherwise be used to pay for maintenance or healthcare costs.

It's vital to weigh all options before getting a policy so you can choose one that best fits your needs. Read on to learn about the six benefits of long-term care insurance.

1. Its Coverage is Comprehensive

Long-term care insurance coverage is comprehensive, covering a wide range of medical and non-medical services. Such coverage includes doctor visits and prescription medications, as well as services like:

  • Physical therapy
  • Occupational therapy
  • Speech therapy
  • Meals delivery
  • Home care
  • Adult daycare
  • Nursing home care

In addition to providing coverage for healthcare expenses, this coverage can also assist with the financial burden of long-term care by allowing policyholders to use the funds from their policy to pay for covered services.

Not only does comprehensive long-term care help fill caregiving gaps, it provides peace-of-mind knowing that if you or a loved one were to ever require long-term care due to an illness or disability, you would have everything you need.

2. You’ll Probably Need It

As you age, you become more prone to needing extended medical care, whether for physical or mental care. Someone turning 65 today will have about a 70% chance of needing some sort of long-term care service in the future.

This means that, over time, it almost becomes inevitable that you’ll end up needing long-term care insurance as you grow older, so making sure you're covered is important.

Long-term care insurance can provide you with the financial security you need to ensure you receive adequate care. This type of insurance will also take a burden off your family when you no longer want to be a burden to them. This way, you and your family can have one less thing to worry about when it comes to taking care of you in the future.

3. Sometimes You Can Get a Refund If You Don’t Use It

Another benefit of some long-term care insurance plans is the ability to get a refund if you don't use it. This is made possible by return of premium (ROP) policies which allow us to get a certain percentage or all of our premiums back if we don't end up needing long-term care.

ROP policies offer the financial benefits of an insurance refund, as well as an extra layer of protection and peace-of-mind should you ever need to file a claim due to incapacity. It's an efficient way to get reassurance on top of your long-term care policy in case something unexpected happens.

4. Its Coverage is Better Than Medicare or Medicaid

One significant benefit of long-term care insurance is that it can provide better coverage than Medicare or Medicaid. This is true regardless of the types of LTC insurance you look at and compare.

Medicare and Medicaid are government programs designed to provide healthcare to people over 65 and children who qualify, respectively. However, it typically does not provide coverage for a range of services needed for extended medical care such as:

  • Assisted living facilities
  • Hospice care
  • Home health aides

Long-term care insurance can provide better coverage since there are no set limits on the amount of money an individual can receive annually to cover such extended medical services.

5. It Protects Your Savings

Avoiding excessive risk is a key factor when it comes to preparing for the future, including securing financial protection for medical care costs. LTC insurance can help protect you from the potentially astronomical costs associated with extended medical care due to aging or disability.

Don't believe those costs are significant? Think again. Currently, the median cost of care in a semiprivate nursing home room is $93,072 a year. Healthcare expenses can quickly consume all of your savings, leaving you and your family members in tough financial times.

With long-term care coverage, you can be provided peace-of-mind knowing that your savings are protected and won't be devastated by costly medical bills.

6. The Premiums Can Possibly Be Tax-Deductible

Finally, long-term care insurance can provide tax benefits to policyholders, as some of the premiums are tax-deductible. The tax rules vary from state to state, so it’s important to determine whether you are eligible for tax breaks on long-term care coverage.

Generally, anyone who itemizes their tax deductions and has a valid long-term care insurance policy may be able to deduct full or partial premium costs. However, the amount you're able to deduct is specified by law. To be eligible, you must meet certain criteria such as medical needs and age requirements.

Other requirements include:

  • Your insurance premiums and other medical expenses have to reach 7.5% of your income before you can deduct them from your annual taxes.
  • You need to have the right kind of long-term care insurance policy (this one is tricky to figure out so it's best to ask your insurance provider about this requirement).

All in all, this can be a massive perk. However, we suggest you contact your tax advisor for details about taxes associated with long-term care policies.

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4 Cons of Long-term Care Insurance

While long-term care insurance can be a beneficial venture to protect yourself and your loved ones in the future, it's crucial to understand the cons of investing in such an insurance policy. For example, these types of policies often have large premium payments or high eligibility ages that you need to meet before any coverage applies.

Additionally, they don't cover all LTC services. There may be caps on covered expenses as well as the length of time for which you or a loved one can receive long-term care. Ultimately, carefully weighing the pros and cons of this type of insurance policy is important to make sure you are making the right decision for your financial security over time.

Now that we've talked about the benefits of a long-term care policy and what's included, let's explore four long-term care insurance problems that some people find when taking out a new policy.

1. It’s Not Cheap

Depending on the chosen policy and personal factors such as your age and health status, the potential costs of long-term care insurance can vary substantially.

Generally, the older you are when obtaining a policy and the poorer your health is, the more expensive the premiums will be.

Additionally, policies with more generous benefit packages often have higher premiums. Therefore, it's important to weigh not only what you can afford now but also what your future needs might be when selecting a long-term care insurance plan.

For example, inflation protection and longer benefit periods will increase the premium cost of a long-term care insurance policy. Taking these factors into account is important to consider when deciding whether or not purchasing a long-term care insurance policy makes financial sense.

2. The Premiums Can Fluctuate a Lot

Long-term care insurance premiums can certainly vary drastically, and this is one of the drawbacks of such a policy. Insurance companies can raise premiums on a block of policies whenever they want, making it difficult for people to budget for and anticipate the premiums that they will be paying for long-term care.

In general, long-term care premiums tend to increase annually as more people age. So, there's always a chance that premiums will become unaffordable if they suddenly skyrocket. Therefore, it's important to decide whether or not long-term care insurance is necessary after considering its potential cost.

More than that, though, it's important to work with the right insurance provider. At Everdays, we're here to help you do just that. Our goal is to offer free professional advice to help you find the right plan for your needs. We offer high-quality insurance products so you and your family can live a stress-free life regardless of what's to come.

3. It’s Hard to Know How Much Coverage You’ll Need

As mentioned at the start, we know that navigating long-term care insurance isn’t easy. One of its major drawbacks is that it can be hard to know how much coverage you need. This is because many factors come into play when determining whether you need long-term care or not.

What do you do when you go to sign up for a new insurance policy? You need to think about the possibility of medical problems resulting in long-term disability or chronic conditions, as well as the potential for early death or living into old age.

All these potential scenarios make it hard to predict what may happen in the future, making it difficult to decide on the exact amount of coverage you should have. This often leads to people overpaying for their premiums since they can't accurately predict their future needs or even if they will ever need long-term care at all.

4. There Might Be Other Alternatives

By now, you hopefully understand that long-term care insurance can be beneficial for those looking to cover costs associated with health care in old age.

However, alternatives exist for those who may be looking for more cost-effective options. A popular alternative includes life insurance.

There are life insurance policies that include built-in features designed to give you access to money for long-term care so you don’t have to burden your family or burn through your savings. Unlike most long term-care insurance plans, where if you don’t use it, the money stays with the insurance company, with a life insurance policy, any unused portion goes to your beneficiaries, tax-free, if you pass away while the policy is still active.

Ultimately, you'll need to assess exactly what kind of protection you need. This will help you decide if finding alternatives to long-term care insurance is going to be a necessary part of your planning.

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Our Balance of the Pros and Cons of Long-Term Care Insurance

As you weigh the pros and cons of long-term care benefits, what we hope you walk away with is an understanding as to how important it is to have coverage in place. We believe that no matter what type of protection you have, preparing ahead of time for long-term life care needs is the only way to provide peace-of-mind for you and your family.

Taking out long-term life care protection enables you to safeguard your health, finances, and well-being long into the future. You can plan and ensure that whatever happens in life, you will be covered and protected in the long run. Investing in long-term life care insurance today will ensure protection from unexpected medical expenses or financial losses later in life.

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Our content is created for educational purposes only. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Everdays encourages individuals to seek advice from their own investment or tax advisor or legal counsel.

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