Most people understand life insurance. You buy a set amount; say $250,000, and when you die that money is paid to whomever you chose – the beneficiary.  Long term care is similar in that you choose the total amount, say $100,000, and it pays when you need help with everyday activities.  Instead of paying $100,000 at once, it pays over time up to the monthly benefit you choose.

Long term care insurance has 2 critical components: Monthly Benefit and Benefit Pool.

• Monthly Benefit: The maximum amount of money paid monthly to cover the cost of care.  If the cost of care is less than your monthly benefit then that money stays in your benefit pool to be used in the future.  If the cost is more than your monthly benefit, you or your family will need to cover the difference.
• Benefit Pool: The maximum amount of money your policy will pay out. Your benefits will continue as long there is money left in the benefit pool.

The national average cost of care varies by the type of care you are looking at. For example, the national average cost of care for home health care is $61,936 a year; while around the clock care in a nursing home averages $113,530 a year.¹

The costs vary significantly based on what state and region you live in.  The cost of care for a nursing home in Oregon is around $107,310 a year, while the cost in New York is over 26% more at about $135,963 a year.

The top three locations to receive long term care are in your own home (home health care), in an assisted living facility, or in a nursing home. Additional options may be available in your area such as respite care and adult day care centers.

How or where you or a loved one receives care can vary in cost.

As you can see, home health care offers the flexibility to receive care in your home, but you may pay more for it than assisted living (depending on the level of care needed).

¹ Based on 2022 Cost of Care Survey by Mutual of Omaha.  Home Health Aide and Private Room in a Nursing Home Care Facility.

The short answer is yes, but not easily and only in certain circumstances.

Long Term Care insurance is designed, reviewed and regulated to never require a rate increase once it is inforce.  However, the law allows insurers to request rate increases if deemed necessary.  These increases can only be on a group of people, based upon the product they purchased.  The rate increase request is reviewed by each state’s Department of Insurance who has the authority to decide if a rate increase is granted, and if so, how much increase is allowed.

Rates cannot be increased for reasons like:

• Increasing age
• Gender
• Health condition(s)
• Filing a claim
• You individually

Insurance companies go through a process of analyzing current claims data, future claims data, interest rates, future risks and many other factors before requesting rate increases. Rate increases cannot be applied to any specific age, gender, health condition, or demographic; they are approved based on policy (product) statistics only.

Insurance companies must get approval from each state’s Department of Insurance (DOI) prior to any increase going into effect.

Carriers propose the percentage of increase they would like to implement and the state approves it ‘as is’ or requires modification.

Because of this involvement by state departments, the state where you purchased the policy determines the percent of increase that your policy could incur. Companies request rate increases for a variety of reasons. The most notable reasons are:

• the increasing cost of long term care services
• increasing claims (people using LTCI)
• a low interest rate environment
• people staying on claim for longer than expected

Rate increases are necessary to help stabilize the market. It may be tempting to cancel your policy or stop paying premiums if you receive a rate increase, but it is usually much more expensive to buy the same plan you have on the current market and at your older age.

The good news is, even if your state does approve a rate increase, you may not have to pay more to keep your policy. Some carriers allow you to lower your inflation protection, daily benefit, or benefit duration to keep your plan within your budget.

Rates are fixed at the age that you buy the policy. The only way the cost can increase is if your state approves a rate increase on all policyholders for that product and then you can choose to accept the rate increase or lower your benefits to maintain the original cost.

The best time to buy any insurance is the day before you need it, but no one knows when that will be. The average age of employees that buy coverage at work is 49.  The average age of individuals that buy a policy is age 56.  The cost goes up as you age and start increasing significantly each year in your 60’s and 70’s.  Also consider your health: as we age we often develop chronic conditions and those can make you uninsurable.

Absolutely! This policy is 100% portable to you whether you move to another state, retire or leave your current employer.

If you stop paying premiums, because the rates have increased and are no longer affordable, your policy will lapse. Letters will be sent to you, and anyone listed on your application as a protection against lapse contact, in an attempt to keep the policy inforce. If attempts are made and premium is still not received, the policy will lapse. In some circumstances you can keep LTC benefits in the amount of premiums paid. For example, if you paid $10,000 in premiums over the life of the policy you MAY be able to keep $10,000 in LTC benefits.

The likelihood of this is small unless you buy a small policy or have a very long claim like Alzheimer’s. Once the entire Lifetime Maximum Benefits are paid the policy terminates since it has paid out.

Shared Care is an optional policy benefit many couples include when they apply together and have identical benefits.  This feature combines the couple’s Benefit Pools into one large pool of money that either partner can use. Here’s an example: A couple buys a policy that provides $100,000 of total benefits to each person.  With this optional feature the insurance company combines both of their $100,000 of benefits into a combined $200,000 that both can use.  If one partner dies then the remaining $200,000 is left for the surviving partner to use.  It is a great cost effective way to leverage a couple’s policy.

Long Term Care policies have a Lifetime Maximum Benefit. Your benefits will last as long as there is money left on that Lifetime Maximum Benefit.  For example, if you had a Lifetime Maximum Benefit of $150,000 then your benefits will last until $150,000 in benefits have been paid as long as premiums are paid.

Unfortunately, there is not a time where the policy would be ‘paid up’.

If your application is approved, you will receive the policy and a letter from in the mail.  If you applied with your spouse/domestic partner you will not receive your policy until a decision is made on both you and your spouse’s/domestic partner’s applications.

If your application is not approved, you will receive a letter by mail explaining the insurance company’s decision and the reason they reached that decision.

Yes, but only if you pay with your Health Savings Account (HSA), which is pre-taxed.

Your policy is effective the day you sign your application, assuming your policy is approved.