What is Long-Term Care Insurance?

Are you worried about what will happen if you need extended medical care in the future?


Long-term care insurance is an option that can provide financial security for those who may require long-term medical assistance. It covers costs associated with nursing homes, assisted living facilities, home health aides, and other services related to long-term care.


With long-term care insurance, you will have access to money to help pay for future care costs related to any extended long-term care needs.


Read on now to learn more about questions like "what is long-term care insurance?" and "how does it work?"

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Need Long-Term Care Protection?

Our innovative term life insurance solution includes powerful built-in living benefit features designed to give you access to money for long-term care. It includes:

  • Long-Term Care Protection
  • Nursing Home Protection
  • Terminal Illness Protection

There are no medical exams required and you can purchase your coverage today - 100% online.

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How Does Long-Term Care Insurance Work?

What is long-term care insurance (LTCI)? It’s a type of coverage that provides financial protection for individuals who need long-term help in completing everyday tasks or managing medical problems as they age.


LTCI plans can help pay for services such as:

  • Nursing home care
  • Assisted living
  • Adult daycare
  • Home health care

How it works depends on the plan, benefits may include reimbursements for medical costs, such as:

  • Routine checkups
  • Therapies
  • Medicare supplement policies
  • Medication

These types of policies have become increasingly popular since they offer an opportunity to pre-pay when you’re young and healthy, keeping the cost of coverage affordable, while protecting against high costs in retirement should the need arise.

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Do I Need It?

With rising inflation and healthcare costs, everyone needs to consider buying a special type of insurance that supplements their regular health insurance. Many people may think they don't need this extra coverage. However, even with regular health insurance, there might still be large out-of-pocket expenses due to gaps in coverage.


When it comes to the types of care found in this special type of insurance, such as:

  • Medical
  • Nursing
  • Long term care (LTC)

Regular health insurance plans are unlikely to cover all the costs that add up quickly.


Taking the time to get familiar with what this particular kind of policy covers can end up being an invaluable asset if one ever needs long-term care or experiences a decline in health as one ages.

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Which Types of Long-Care Insurance Exist?

Long-term care insurance typically covers both personal and custodial care in a variety of settings. There are two main types of long-term care insurance policies:

  • Traditional long-term care insurance
  • Hybrid insurance

Traditional LTC insurance exclusively provides funds to cover long-term care expenses whether the services needed are at home or at a facility. However, if you don’t use it, the money spent stays with the insurance company.


Hybrid policies combine traditional forms of life or annuity protection with long-term care insurance. It provides coverage for long-term care services only if you need it. If you never require long-term care, your loved-ones would receive the policy benefit after you pass away.


Both traditional and hybrid forms of LTC insurance provide individuals with the peace-of-mind knowing they will have some financial coverage if illness or advanced age leads to costly medical treatments or different residential settings down the line.

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Long-Term Care Coverage: Getting the Right Care

Having long-term care (LTC) coverage is important because without it, you may end up burdening your family or burning through your savings trying to pay for these high care costs. Coverage is generally recommended to reduce these financial burdens and make it possible to receive necessary care that cannot be provided in the home.


Let's take a look at the different care options covered by LTC, depending on the policy.


Home Health Care

Home health care is a type of care service that provides medical and non-medical assistance to individuals in their own homes. It usually consists of skilled nursing and therapy services, as well as other forms of help with activities, such as:

  • Bathing
  • Dressing
  • Meal preparation
  • Transportation

In some cases home health care also includes personal care services like meal delivery and house cleaning.


Respite Care

One long-term care solution that is gaining recognition from health insurance companies is respite care. Respite care provides temporary relief to long-term caretakers by providing substitute care, usually on a short-term basis.


Caretakers can take a break and have peace of mind knowing that the quality of long-term care of those they are caring for remains consistently high and professional. Many long-term care insurance policies offer coverage for respite care services.


For example, long-term care insurance plans may offer coverage to help families reduce the stress involved in providing long-term daily living assistance to their loved ones.


Adult Day Care Centers

Adult Day Care Centers are a type of long-term care coverage option for people of all ages. This type of service helps those suffering from long-term medical conditions, as well as provides critical support to family caregivers. It involves both therapeutic and recreational activities in a group setting, monitored by qualified staff.


This type of long-term care coverage is ideal for those who need assistance but are not quite ready to move into long-term residential care. Available services will vary depending on the center and its location but may include:

  • Meals
  • Medication management
  • Exercise programs
  • Social activities
  • Psychological services


Assisted Living

Health and long-term care insurance are critical components of retirement planning, and long-term care coverage is a particularly important consideration.


Assisted living can be an invaluable resource for those needing help with daily activities, such as:

  • Bathing
  • Eating
  • Dressing

Long-term care insurance can play a crucial role in ensuring seniors have the financial means to cover the costs associated with assisted living or other long-term care services.


Nursing Home

Securing long-term care insurance is often considered long before it's needed - and for good reason. Nursing home care in particular can be expensive and long-term care insurance helps to ensure that you are prepared in the event of a long-term stay. While policy variation exists, long-term care insurance typically covers more than expenses incurred while in a nursing home, including medical and non-medical services usually provided at home, such as:

  • Transportation
  • Meal preparation
  • Physical therapy
  • Custodial care

When reviewing your long-term care insurance policy options, be sure to read the fine print regarding what is covered and for how long, so you have the peace of mind that you'll have the long-term coverage that best suits your needs.


Alzheimer's Special Care

Long-term care coverage for Alzheimer's Special Care helps provide financial relief for long-term treatment plans. Even with advancements in modern medicine, Alzheimer’s disease is a long-term illness and requires significant caretaking and special attention. Long-term care coverage helps cover the required costs associated with this type of situation.

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When and How to Buy It?

When considering long-term care insurance, certain factors will help determine when and how to buy. Age is an important variable - it is typically recommended to purchase a policy at an age before 50 as premiums tend to be less expensive the younger you are.


Understanding the particulars can help determine which type of insurance best suits your needs of the policy, such as:

  • Coverage amounts
  • Duration
  • Premium costs
  • Benefits

It is helpful to research different policies and insurance companies to make sure you select one that will offer you reliable coverage over time. Ultimately, understanding when and how to buy life insurance is key to making sure that both you and your family are adequately covered in the future.

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Are State “Partnership” Programs Worth It?

State "partnership" programs are long-term care insurance programs implemented by various states to incentivize policyholders and offer them solutions should long-term care needs arise.


Forty-five states currently have such a program, with different benefits offered depending on the state. For those interested in long-term care insurance and the state partnership programs, it's best to discuss the options with a knowledgeable licensed financial professional or research your state's program online before purchasing.


This can give you an overview of all the long-term care insurance options available in your specific state, so you can choose one that fits your needs best.

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How Much Does Long-Term Care Insurance Cost?

Long-term care insurance can provide invaluable coverage, but potential buyers should not be taken by surprise when they assess their available options and the cost associated with them.


Each year, LTCI policies have new premiums that are heavily linked to numerous factors, including:

  • Individual's age
  • Health condition
  • Marital status
  • Gender
  • Benefits

In general terms, this type of policy will cost anywhere from a few hundred dollars to over $10,000 annually depending on the profile of the insured.

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Is It Tax Deductible?

Managing the costs of long-term care can be difficult, but one upside is that some of these expenses may be tax deductible. Long-term care insurance can help cover certain health needs when an individual needs assistance with their daily living.


Additionally, if premiums are paid with qualified funds or through employer-sponsored plans, these payments may be tax deductible for individuals filing taxes as itemized deductions. Depending on your age and the itemized deductions you have available, uninsured medical expenses could potentially save you thousands of dollars in taxes come tax time.


Furthermore, it pays to monitor developments on federal income taxes as they continue to evolve because recent legislation has been enacted making even more deductions available for those who meet the criteria.

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How Do I Make a Claim?

Most people will never need to claim long-term care insurance, but those who do should understand what the process entails. Claims are typically made through the insurer’s website or customer service line and require certain documents like:

  • An application form
  • Medical records
  • Proof of premiums paid

However, let's take a look at the process you can expect when you make a claim.


Get a Claim Packet

When claiming long-term care insurance, it's important to contact the applicable insurance company and get a claim packet. Depending on the company, this packet may be able to be filled out online or it may require paper forms.


For those that don't know where to start, having an insurance advisor is a great help. An adviser that you have worked with in the past for your long-term care insurance can assist you in getting information about completing the claim process.


Pay close attention to everything included in the claim packet as it will inform how your situation is assessed and result in what type of coverage you qualify for.


Fill Out the Claim Packet

Once you have all the necessary information, begin to fill out the claim packet. It is important to read what is included in the packet and make sure it has everything that should be there. The questions asked in a long-term care insurance claim can vary depending on what type of coverage you are asking for. However, they typically ask about your:

  • Name
  • Address
  • What type of care you need

In addition, the packet may include questions about the amount of coverage requested or what type of resources are available to cover your needs outside of insurance.


What Else Is Included

Filing a claim packet is an important step in ensuring you will receive the compensation and coverage you need. All of the documents required for a claim should be included, make sure you have:

Gathering all of these documents can feel overwhelming, but having them on hand will provide your insurer with the evidence needed for a quick and efficient review of your claim. Be sure to double-check that each document is completed correctly before submitting it. This will help avoid unnecessary delays in processing your claim.


Attend a Phone Interview

Once your provider has all of your information and claim, they will likely want to schedule a phone interview to verify and confirm the information. The purpose of the call is to make sure that what you are requesting is what you need and what is covered under your policy.


In addition to verifying info, the representative may also ask questions about:

  • How long you have been receiving care
  • What type of care you are receiving
  • What activities currently require assistance


Wait for a Response

Finally, you will need to wait for a response from your provider. Generally, you will receive a letter or email with the outcome of your claim and what type of coverage or compensation you have been approved for. In some cases, your provider may also request additional information before making a final decision, so be sure to check in with them regularly during this time.

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When Do I Start to Get the Payments?

Generally speaking, long-term care benefits begin when a catastrophic disability or long-term illness causes severe cognitive impairment. You will need verification by a healthcare professional, and proof that you have significantly limited your ability to perform two or more activities of daily living without substantial supervision, such as:

Once this has been confirmed by an independent doctor, you will be eligible for long-term care payments.

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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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