Understanding Long-Term Care Insurance

What is long-term care insurance?

Long-term care insurance can help pay for medical, personal, and social services for people with chronic or disabling conditions. People who qualify for long-term care usually require nursing care or constant supervision.

Who might consider long-term care insurance?

Keep in mind that long-term care insurance is not for everyone. It can be costly and can come with lots of restrictions. Still, long-term care insurance can be an important option to consider when preparing for the future.

If you develop a health condition that requires long-term care and you do not have long-term care insurance, you may have to pay the entire cost of long-term care out of pocket, which can be a huge financial burden. Long-term care is not usually covered by traditional health insurance plans. Medicare generally does not cover long-term care either. Age and any health conditions you have can affect eligibility and cost.

Before making decisions about which policies, if any, to purchase, be sure to:

  • Thoroughly research policies
  • Review the coverage
  • Compare policy options

Download complete insurance quick reference [PDF 6 pages, 183k] including the health insurance options information on this page.

Where can a person receive long-term care?

You can receive long-term care at home, or in an adult day care center, an assisted living facility, or a nursing home.

How does a person purchase long-term care insurance?

Long-term care insurance can be offered through an employer. Or you may be eligible for coverage through a union, fraternal group, or other organization to which you belong. In addition, many insurance companies offer individual long-term care insurance.

Factors to consider

Long-term care insurance plans vary from policy to policy. There are lots of factors to consider. These include:

Factor Why it matters
Coverage Some policies cover nursing home care. Others may cover only home care. It's important to find out which services are covered.
Daily or monthly benefit The daily or monthly benefit is the amount of money the insurance company will pay for each day or month a person is covered.
Benefit period The benefit period is the length of time in which a person will receive benefits.
Elimination or waiting period Elimination or waiting period is the amount of time a person must pay long-term care expenses out of pocket. The longer the waiting period, the lower his or her premiums are likely to be.
Inflation protection Health care costs tend to rise each year. Inflation protection helps manage the rising costs of long-term care.
Nonforfeiture benefit Policies with a nonforfeiture benefit will continue to pay for long-term care even if a person stops making payments. This feature can add to the premium.

Important things to know

  • It's always a good idea to shop around for a long-term care insurance policy. Compare features and benefits, as well as cost.
  • Never pay an insurance agent in cash-write a check directly to the insurance company. This can help protect against fraud.
  • Keep in mind that a "free look" clause allows you to review a long-term care insurance policy and cancel it within a certain number of days. Contact your state insurance commission for specific details.
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