Seven questions to ask about long-term care insurance

7 questions to ask about long-term care insurance

We get calls and emails from people everyday asking us how to pay for assisted living and other levels of senior living health care. Assisted living is not considered nursing home care, and its cost is only partially covered, if at all, by Medicaid. Many private senior living communities do not accept Medicaid payments, and there is an extreme shortage of low-income assisted living that is obtainable.

So…if you don’t anticipate having enough private funds available through savings or investments or the sale of assets, like your home, that can be applied to senior living care, there is an alternative you should investigate: long-term care insurance.

We won’t pretend we can cover all the options and intricacies of long-term care insurance within one article. Find a reputable provider or trusted independent insurance agent, do your research, and talk to a financial adviser and a health care fraud lawyer, because the terminology can be difficult to understand, and your current and anticipated health care needs are a major determining factor in the type of coverage you may need or can even obtain.

There are, however, seven questions you should ask your agent and yourself about any long-term care insurance policy:

  1. What is the elimination period? The shorter the elimination period, the more expensive the policy. Is it better for you to pay for 90 days or so of long-term care when it’s needed, or should you shorten the elimination period and pay upfront in your insurance premiums. You will pay either way.
  2. Is the elimination period based on consecutive days or can these days be accumulated over time?
  3. What is the maximum payout of the policy? You don’t want to outlive your funds, but you don’t want to overpay for a policy that you won’t almost fully utilize.
  4. Does the payout cover only out-of-home care, or in-home care, too? What percentage of the payout is allocable to each?
  5. What types of care are included and excluded? Do I have to meet specific tests, such as the inability to perform one or more activities of daily living, before the policy will activate for assisted living care?
  6. How long does the coverage last? Does the policy ever expire? (There are more centenarians every year). Once the policy activates, do I have a certain amount of time to use all my benefits, or do they expire after a set amount of time.
  7. Is there an inflationary rider? Will eliminating it make the policy less expensive? If you’re buying the policy early in life, the inflationary rider is a good option. If you’re acquiring the policy later, you may not need it.

Again, do your research, look at your family’s health history, look at your projected available funds, and try to take a stab at how much coverage you may need. It’s better to over-insure than under-insure, but the cost of the policy may dictate how much coverage you can buy.

Two important facts to remember:

  • Nearly 75% of senior Americans will need long-term care at some point in their lives, and, as with almost everything else, it’s not getting any cheaper. The earlier you buy, the better.
  • According to some financial professionals, the ideal age to begin a policy is between 50 and 65, and of course, you have to purchase it before you need it, or you can’t get it at all.