Constitutional Health Network:
Three Key Facts About Long Term Care Insurance
We hear a lot about long term care (LTC) insurance. Some people say it’s an absolute necessity. Other people claim it’s a waste of money. Both sides have the facts and figures to support their case. It’s hard to know which side is right.

Before you make the decision about buying LTC insurance, you should know that Medicare does not pay anything for assisted living. Medicare only pays for short stays in skilled nursing or rehabilitation facilities. Medicare parts A and C do cover nursing home care if you need medical services, but they don’t cover the costs if all you need is custodial care or assisted living. You may qualify under Medicare for PACE (program of all-inclusive care for the elderly), which covers adult day-care.

Medicaid recipients may qualify for nursing facilities that meet the state defined standards. You may also qualify for managed care if you meet the requirements of the state where you live. Usually you must have very low income and very few assets to qualify.

Now that we’ve put to rest the idea that the government will pay to keep you in assisted living, you need to consider your own situation. Ask yourself the following questions:

  • Am I likely to need long term care, given my current health and my parents medical histories?
  • For how long might I need care?
  • Do I have enough wealth to pay for it out of pocket?
  • Will my spouse be left penniless if I pay for it from my assets?
  • Will I be able to rely on family for my care if I don’t have insurance?
  • Do I want to rely on family for my care?

Every situation is different, which is why most articles on the subject are so confusing. Only you know the answers. Only you can make the decision.

If you have decided that LTC insurance makes sense for you, don’t rush out to buy the first policy you can find. You need to do some research. Compare policies. Find out the key facts about each policy you are considering first. 

1. Coverage limits

The first thing you will want to do is ensure that the policy will cover the care you need. Many policies have low limits that won’t come close to the cost of assisted living or a nursing facility. Depending on the part of the country where you live and the amenities, assisted living can easily cost more than $5,000 per month. It costs even more if you have Alzheimer’s Disease because of the additional care required. A policy that doesn't cover your costs is a waste of money.
The costs of assisted living costs will rise just like everything else. Make sure there’s an escalation clause so your benefit keeps up with inflation.
Check how long your coverage lasts as well. Some policies stop paying after two or three years. With some illnesses, you could need care for five years or more.

2. Price and Benefit Increases

If you’re over 50 when you buy the policy, your rates will be higher than for someone younger. Insurance companies must get approval from the state you live in to raise rates. They can’t change rates for a specific policy. They can only change rates for an entire class or group of people. Even so, changes are possible. Plan for them.
One way to plan is to add a rider to your policy that stipulates that your coverage limits can rise but the premiums can’t. Not all policies offer this option. Even if yours does, it may not be right for you. You could end up paying more in the long run. However, you will have peace of mind. If you do decide to add this to your policy, make sure you know how long the rates remain in place.

3. Premium Waivers

Some policies force you to keep paying premiums even if you are in a care facility. Read your policy carefully to make sure that it offers waiver of premiums while you are receiving benefits.
Not everybody needs long term care insurance. If your health history makes you think you or your spouse might need it, be sure to check your policy for these “gotchas” before you sign on.
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