Understanding Long Term Care Insurance

As the American population ages and baby boomers begin retiring, the medical services and health care insurance they are used to are changing. One significant innovation is that more healthcare and rehabilitation is being provided at home instead of in a facility.The problem is that this care is not usually covered by traditional health insurance or Medicare.  The roots of long term care insurance began to emerge in the 1970s. The idea is to provide financial support for general health care mostly, but not always, at home; and to provide that support over several years.

How is LTCI different from standard health care insurance?

Traditional health insurance covers specific treatments and procedures, usually comparatively short-term. A surgery, a prescription, a doctor’s visit. Emerging long term care insurance covers more general care, like basic daily needs. Nursing homes are the first thing that come to most people’s minds, but Long Term Care Insurance (LTCI) has evolved to cover much more than that, including:

• Home care, including home chore services like cleaning, shopping and assistance with daily basics like bathing, dressing, eating, visiting the bathroom, and just getting around.
• Care that is required for diseases like Alzheimer’s, Parkinson’s, and includes specialized memory care facilities
• Caregivers, nurses, therapists, etc.
• Adult day care and other community services
• Assisted living up to, and including, nursing homes and hospices

How much does LTCI cost?

For a 50-year old person, the premium price for long term care insurance can range from $750 a year for a high deductible, short duration plan for 1-2 years, up to $5,000 a year for a very robust, low deductible plan with long duration plan of 6+ years. Like all health insurance, a lot of factors affect the price of premiums for LTCI. The most common ones include:

• Age
• Current health (including things like smoking and any current chronic conditions like diabetes)
• Gender (fairly or not, it generally costs more for women)
• Relationship status (couples buying together get larger discounts)

Not everyone will automatically qualify, and some will have to pay more due to one or more of the above factors. Most policies qualify for tax benefits; some do not. Other variables exist.

You can get an estimate of what a policy might cost you here.

LTC Consumer is a new, free online service to help consumers understand what long term care insurance is, how it works, and how to evaluate coverage options. Our mission is to provide an educational, no-pressure resource for learning about long term care planning, with the opportunity to speak with specialists who can help them.
*We will use LTC to refer to the delivery of long term health care itself, and LTCI to refer to insurance plans designed to pay for that health care.