With people living longer these days, the chances increase that they at some point will need health care services. Long-term care (LTC) insurance is designed to help pay for prolonged care whether related to age, disability, injury or illness. First, you should know that Medicare does not pay for most long-term care. While Medicaid generally does, it is designed only for those with very little income and few assets.
Consider your risks. If chronic or debilitating health conditions run in your family, then LTC insurance might be a high priority. The same is true if you need to protect income and assets that could be jeopardized by the cost of long-term care.
Look at insurance providers that are well-established and likely to be around in the future when you need to use your benefits. When selecting a policy, keep in mind:
- Setting a long-term budget that includes LTC insurance premiums helps ensure that you are all set for many years of payments.
- Not all LTC policies are alike and can cover many kinds of care (home health aides, assisted living, nursing homes, adult day care…). Understand what types
- of care services and facilities qualify for benefit payments (these vary by state).
- Buy just the coverage you may need by factoring in how much you are willing to pay for care using income or assets.
- Policy options let you specify a variety of daily benefit amounts, for specific durations for various premium amounts.
- Like life insurance, premiums increase with age. (As part of a long-term plan, people in their early 50s are not too young to prepare for life’s uncertainty.)
- Employers, professional associations and alumni groups may offer LTC insurance at lower group rates.
- Remember that you can, for any reason, cancel a policy within 30 days and get a full refund.
- When considering the uncertainty that comes with age and your individual risks and assets, LTC insurance can be part of a good strategic plan to protect your future.
A Few Facts About LTC Policies
- Policies typically cap the lifetime amount they will pay.
- Policy riders are often available that adjust benefits to cost of living increases (a consideration for younger buyers).
- Most policies have waiting periods from the point of a claim to when benefits are actually paid.
- A shared-benefits rider enables married people to access each other’s benefits if one uses up their own benefits.
- Some policies will let you pay accelerated payments over a set time period, (e.g., 10 years) and then be fully paid for life.
- “Guaranteed renewability” provisions mean that you cannot be singled out for cancellation or a rate increase.
- Policies typically exclude coverage for conditions such as self-inflicted injuries, alcohol and drug abuse, and mental illness.
- Premiums may be deductible on federal and some state tax returns.