What Is Long-Term Care Insurance?

Long-term care insurance is a special insurance policy meant to pay for long-term care, which is often required when dealing with a chronic condition or disability. According to the CDC, six in 10 adults deal with at least one chronic disease, and chronic diseases add up to $4.1 trillion every year in health care costs. A long-term care insurance policy can help provide financial protection when chronic health issues require additional care at home or in a care facility.

Long-Term Care Insurance Covers Care Costs

Seniors facing disabilities or chronic health conditions often find themselves in need of long-term care. Long-term care insurance is one way to plan for the cost of that care. It pays for some or all of the care received in different settings, including at home, nursing homes, assisted living, and adult day care facilities. Coverage for in-home care pays for services such as caregivers, private-duty nurses, housekeepers and companions. Every policy limits how much money it will pay per day and the maximum number of days it will pay. 

How Long-Term Care Insurance Works

Applicants typically need to answer health-related questions before getting a policy. Some companies may want to see health records. That’s because the person’s age and health status impact the cost of the policy, and some health conditions can cause the applicant to be denied a policy. Gender and marital status can also affect the premiums. Women and single people tend to pay more in premiums. 

The amount of coverage chosen is also a major factor in the insurance cost. Higher daily limits and lifetime benefits result in higher premiums. Policies also offer optional features that can increase prices, such as a shortened elimination period and adjustments for cost-of-living increases. 

When the covered person needs long-term care, they can file a claim with the long-term care insurance company. This may require medical records or an evaluation from a nurse to have the claim approved. Many long-term health care insurance policies have an elimination period, which requires the person to pay for the care out of pocket for a certain amount of time, usually ranging from 30 to 90 days. After this period, the insured person will start receiving reimbursements for the cost of care. 

Why People Get Long-Term Care Insurance

The chance of a person who is 65 years old needing long-term care at some point is 70%, and 20% of those people need the care for more than five years. The cost of long-term care is high, so paying for the care out of pocket is difficult for many people. Regular health insurance and Medicare don’t pay for long-term care. Medicaid will cover the costs once the person’s savings have been exhausted. Long-term care insurance helps cover most or all costs to protect savings. It also allows more choices for care than someone might have with Medicaid since the care options are usually limited with Medicare.