LTC Insurance

Long Term Care (LTC) insurance, also commonly referred to as nursing home insurance, has been around for years. However, it has been my experience that very few people have this type of insurance. With the average national cost of nursing home care exceeding $6,000 a month, this is enough to drain most bank accounts in a hurry.  LTC insurance that will pay this High Cost of Nursing Home Care is a very valuable asset.

Let me quickly add that I do not sell LTC insurance.   However, based on the above cost of care number, you can see why it’s so valuable.  If it’s so valuable, why doesn’t everyone have it? The answer may be very obvious. LTC insurance is expensive. The longer you wait to get it, the more it costs. Additionally, if you develop health issues, you probably won’t be able to qualify for it, even if you are able and willing to pay for it. So the lesson to learn here is check on LTC insurance earlier rather than later. If you do consider a LTC policy, here are 7 valuable questions you need to ask your insurance agent:

  1. What is the daily rate? That is, how much will your policy pay toward the cost of care per day. Again, with most nursing homes in our state charging $150 to $200 per day or more, you would typically want the policy to pay enough to cover your LTC shortfall (Costs – Income).  The best practice is to meet with your Elder Law Attorney or insurance professional to determine the appropriate amount of daily coverage.
  2. Does the policy have an inflation rider? This is a policy provision that increases the daily rate from year to year to keep up with the cost of inflation. I have noticed that nursing home prices keep going up. I haven’t seen any go down. An inflation Rider is expensive but so is the rising cost of care in a nursing home.
  3. How long will the policy pay? The typical terms that we have seen on our clients’ policies over the years are 3 years, 5 years and lifetime pay.  Obviously the longer the policy will pay, the more it will cost. Again, meet with your Elder Law Attorney first.  With the current 5 year look-back rule in place, some Seniors may be able to save money on their policy by buying a policy that will pay a shorter term – provided that an appropriate plan is in place to qualify for Medicaid at the end of the plan period.
  4. What will the policy pay for? Most newer policies will pay for Nursing Home, Assisted Living, and even Home Care; however, do not take this for granted. Check to see what is covered.
  5. Will a policy pay for home medical equipment should your loved one receive their care at home?
  6. Some policies pay for respite care. Again check your policy carefully to see how your policy defines the term “respite care”. Respite care is normally time that you take for yourself, away from your loved one, to clear your mind and rejuvenate your body. While you are getting some much-needed R&R, where will your loved one stay?  Some policies will pay for respite care at home and others will even pay for short term respite care in a facility like an ALF or a Nursing Home.
  7. Does your state have a partnership program?  In our State, a person with a LTC Partnership Policy is allowed to claim an offset for an equivalent amount of Countable Assets (equivalent to what the LTC Policy will pay) when they apply for Medicaid assistance to help pay Nursing Home costs. This is an oversimplification of the way the program works, but this is a very good deal. Does your state have a similar program?  Is your policy compatible with your state’s partnership program?  It’s worth your time to find out.  This is a very valuable program which, at least in our state, seems to be a closely guarded secret.  I rarely see anyone with a Partnership Policy.

All of these are good questions to ask. This is definitely not a comprehensive list – there’s no substitute for having your policy reviewed by your Elder Law Attorney.  A LTC policy combined with a good plan to pay after your insurance terms out is the best practice.  

It’s also a good idea to check competitive rates. But, make sure the policies you consider have similar options and riders so you can do an apples-to-apples comparison.  LTC insurance is a great product when you know the proper questions to ask. It can be expensive but it’s something worthy of your consideration. I wish you the best with your search.

About the Author

Doug & his wife Cindy have not only helped hundreds of families with their estate planning and elder law needs over the years, but have personal experience as caregivers and advocates for their Loved Ones as well.

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