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What Long Term Care Insurance Covers (and What It Doesn’t)
Written by Angelike Gaunt
about the author
2 minute readLast updated March 14, 2023
Making sure your loved one has the care they need in an environment that caters to their health care and lifestyle needs is a stressful experience. Figuring out how to pay for this care can add to caregivers’ mental load. Long-term insurance is one means of covering the costs of care. However, this insurance doesn’t cover all forms of care, making it necessary to anticipate what services your loved one may need or want in the future.
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When it comes to paying for long term care, Americans are unprepared. About 70% of people age 65 and older will need long term care, but more than half of Americans mistakenly believe Medicare will pay for it. In fact, Medicare only pays for short-term nursing home stays under very specific circumstances. Other people plan to use Medicaid without realizing it’s only available to seniors with very low incomes and few assets besides their home and car. One way to prepare now in case you need long term care later is to look into long term care insurance.
Who should consider long term care insurance?
As of 2021, national median long-term care costs ranged from $54,000 to $108,000 per year for assisted living (at the low end) to nursing home care (the most costly option). According to the US Department of Health and Human Services, the average duration of long-term care is 3.7 years for women and 2.2 years for men, but one in five seniors who needs care will need it for five years or longer. If you’re not prepared to pay these costs out of pocket, through a reverse mortgage on your home, or out of a cash-value life insurance policy or annuity, a long-term care policy can help.
What does long term care insurance cover?
Each policy is different, so you’ll need to work closely with your broker or agent to make sure you choose the coverage you need. But in general, long term care insurance can help you pay for: For older adults who want to age in place, long-term care coverage can make it possible. Most comprehensive long term care policies pay for in-home care if you need help with activities of daily living like dressing or household tasks like paying bills, cooking, and light housekeeping. These policies typically also pay for in-home therapies and skilled nursing services you may need, which can mean the difference between living at home and moving to a nursing home. Other things your long term care policy may cover include training for a family member who will be your caregiver and home modifications like wheelchair ramps. Ask your agent to clarify whether these benefits or others are part of the policy you choose. Each policy has a daily benefit amount, and most set a limit on the number of years that you can claim benefits. There are lifetime-benefit policies, which cost more than term-limited coverage. Because senior-care costs are rising faster than the rate of inflation, you may want to buy a policy that offers inflation protection.
- adult day programs
- respite care
- assisted living
- nursing home or specialized dementia care
- hospice services
What isn’t covered by long-term care insurance?
If you have a pre-existing condition, care related to it may not be covered during an exclusion period that can last for several months after you buy the policy. If a family member provides your in-home care, your policy may not pay them for their services. Medical care is covered by Medicare or Medicaid rather than your long term care policy. By learning about long term care coverage now, you’re more likely to get the care you need in the setting you prefer later on. Learn more about choosing long-term care coverage on the SeniorAdvisor.com blog.
The information contained in this article is for informational purposes only and is not intended to constitute medical, legal or financial advice or create a professional relationship between OurParents (A Place for Mom, Inc.) and the reader. Always seek the advice of your health care provider, attorney or financial advisor with respect to any particular matter and do not act or refrain from acting on the basis of anything you have read on this site. Links to third-party websites are only for the convenience of the reader; A Place for Mom does not recommend or endorse the contents of the third-party sites.
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