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What You Need to Know About Long-Term Care Insurance

When it comes to planning for aging well, the cost of long-term care is a big unknown. No matter how well you’ve planned financially for your senior years, the need for long-term care—at home or in a group setting—can devastate your retirement lifestyle and any legacy you hope to leave your family. That’s why many people choose to buy long-term care insurance (LTCI).

Long-term care insurance is designed to help cover the costs of long-term care services, which can include assistance with daily activities, home health care, adult day care, assisted living, or nursing home care. These services can be expensive, and long-term care insurance helps protect your assets and provide peace of mind.

Here’s what you need to know about long-term care insurance:

1. Costs: Premiums for LTCI policies can vary based on factors such as your age, health, the level of coverage you select, and the insurance company. The younger and healthier you are when you purchase a policy, the lower your premium will likely be. Premiums can range from a few hundred to several thousand dollars per year. Shop around.
2. Types of policies: Long-term care insurance policies can be categorized into two main types:
   1. Traditional policies offer a predefined benefit amount for a specified period. The benefits may be adjusted for inflation, depending on the policy options you select. You will pay premiums for as long as the policy is in effect.
   2. Hybrid policies combine the features of traditional LTCI with a life insurance or annuity policy. If you don’t use the long-term care benefits, the policy can provide a death benefit to your beneficiaries or a cash value that can be used for other purposes.
3. Benefit triggers: To use your LTCI, you must meet the policy’s “benefit triggers,” which are conditions that qualify you to receive benefits. Typically, these triggers are based on the inability to perform a certain number of “activities of daily living” without help, such as bathing, dressing, eating, transferring, and toileting. Alternatively, some policies may be triggered by cognitive impairment, like Alzheimer’s disease or dementias.
4. Waiting period: Most policies have a waiting or “elimination” period, which is the number of days you must wait before your insurance benefits start, after qualifying for long-term care. The waiting period typically ranges from 30 to 90 days, and longer waiting periods usually result in lower premiums. You’ll be responsible for covering your costs during this period.
5. Benefit period: LTCI policies have a defined benefit period, which is the length of time during which the policy will pay for your long-term care expenses. Benefit periods can range from a few years to a lifetime. The longer the benefit period, the higher the premium.
6. Inflation protection: Many policies offer inflation protection options, which help ensure that your benefits keep pace with rising costs. However, choosing inflation protection can increase your premiums.

For Massachusetts residents, the Massachusetts Division of Insurance can provide resources and guidance related to long-term care insurance.

When considering LTCI, it’s important to evaluate your financial situation, health, and family history, and discuss your options with a financial advisor or insurance agent. Keep in mind that while LTCI can provide financial protection, it’s not suitable for everyone. Other options like self-funding or relying on government programs like Medicaid may be more appropriate in some cases.

How we can help

As always, we at LifeCare Advocates are happy to help you research and evaluate insurance programs. We can also help with the claims process and strategies to ensure you get the most out of a policy you have paid into for years.