a senior citizen getting her blood pressure taken from a young woman

What Is Long-Term Care Insurance?

Around 50% of all seniors 65 or older will need some long-term care because of illness and age. Those odds may have you wondering more about how you would pay for long-term care if you need it in the future. Do you already have insurance in place that will cover those needs?

As a senior, you might have heard about long-term care insurance and be wondering if you should consider it for your own future. Are you wondering what exactly is long term care insurance and what it covers? Are you considering whether you should add this insurance for the future?

Read on to learn all you need to know about long-term care insurance.

What Is Long-Term Care Insurance?

Long-term care insurance can be complicated and comes in a variety of forms. It can sometimes be pricey too, so it’s important to understand so you get the coverage you may someday need.

Long-term care insurance, sometimes called long-term health care insurance, is a type of insurance policy to care for long-term chronic conditions. The insurance provides coverage for personal and custodial care and helps with the activities of daily living.

When a person needs these services, it’s most commonly provided by home health aides, adult daycares, and nursing homes. These can be long-term services and their cost can add up quickly, which is the reason many businesses opt to get the needed insurance coverage for their employees.

What Does Long Term Care Not Cover

Many people have health insurance that provides coverage for some services. Yet, often chronic long-term conditions reach insurance limits and the insurance is no longer able to cover care. If a person needs to be admitted to a nursing home or needs home health care, regular health insurance will not cover that care.

Many senior citizens have Social Security benefits with Medicare. While Medicare provides good health care coverage, it doesn’t provide long-term care. Even long-term disability insurance won’t often cover long-term care.

What Does Long-Term Health Care Insurance Cover?

Long-term health care insurance is not like regular health insurance. Health insurance would be responsible for any acute illnesses.

On the other hand, long-term health care insurance covers the needs of chronic illnesses. It covers things like:

  • Nursing home costs
  • Skilled nursing in the home
  • Rehabilitation care

For many seniors, who might need help with activities of daily life like getting up, getting dressed, cooking, and eating, long-term care insurance provides coverage.

Again, it’s worth noting that long-term care insurance policies can be complicated. Anyone seeking this type of policy should read it carefully to know exactly what coverage is included. One policy to another can vary.

Cost of Long Term Care Insurance

There are several factors that can affect the cost of long-term care insurance. The actual policy and its coverage will impact the cost. Because custodial care is costly, this type of insurance tends to be higher in price. There are several factors beyond just the coverage that can affect the cost. More on this later.

Age is one factor. Let’s look at how age affects cost. Long-term care insurance for a 65-year-old couple costs $3700 annually. A 55-year-old couple, on the other hand, will pay $2100 annually, on average.

As you age, the likelihood of needing long-term care insurance increases, and therefore, so does the cost.

Pool of Benefits

One term you want to learn related to long-term care insurance is a pool of benefits. When you get a long-term care policy, you gain access to “the pool of benefits”. The pool of benefits is how much the insurer will pay out on your behalf from the policy.

The pool of benefits is based on two separate values that are a part of the policy.

First, there is the daily or monthly benefit. This is how much the insurer would pay out as a maximum. Imagine needing nursing home care. If the daily benefit is $250, but your nursing home room costs $500 per day, you pay the overage out of pocket.

The second consideration with the pool of benefits is the benefit period. This is the amount of time the policy will pay out the daily or monthly benefit.

You don’t have to know much about insurance to understand that the daily and monthly benefits along with the benefit period will affect the rate for this coverage.

Other Factors for Cost

There are few other policy considerations that can also impact the cost of a policy.

The first is inflation protection. This is built-in protection on rate increases based on inflation rates. The other is the waiting period. This is how long you’d need to wait before you can use your policy.

Other factors that can impact cost include:

  • Age of the person covered
  • Health status of the person covered
  • Gender
  • Marital status

These demographics may not be as big of a factor as some other considerations like the pool of benefits, but they are a part of the cost factors.

Who Needs Long-Term Care Insurance?

You might still be trying to decide if you’re a person who should get long-term health care insurance. Ultimately, who should consider getting it?

The answer is that anyone who is above the age of 50 should start to consider it. With the cost of custodial care so high, you want to be prepared for the worst-case scenario.

Often, people who have spent their lives saving and investing money don’t want to tap into this money for long-term care. They don’t want to imagine the money they have worked hard to save getting eaten up quickly covering their custodial care needs.

Also, many seniors find they don’t want to become a burden to their children or extended family. They want to know they have the coverage to get the care they need without it impacting others. Likewise, if you’re a senior who doesn’t have family who could help you, the coverage becomes important protection.

When to Buy Long Term Health Care Insurance

It’s already known that the younger you buy the coverage, the less it’s likely to cost.

You also want to consider your family’s medical history. If there are parts of your medical history that suggest you could have an illness later in life that might require custodial care, it would be smart to get it early on.

Understanding the Ins and Outs of Long Term Care Insurance

Understanding the answer to what long-term care insurance is can help you better understand not only why it’s important coverage, but also why it’s smart to get it sooner rather than later.

If you’re interested in learning more about long-term care insurance, we would love to help. Contact us today to get more information or to set up an appointment to discuss your coverage options.