Long Term Care Health Insurance: Q & A

So many congressional bills and promotions are floating around Washington these days that one would think the government is desperate to get people to purchase their own Long Term Care insurance (LTCi. And they are. Uncle Sam knows that by the time the baby boomers reach their 80s or even 90s, the needed care—provided relatively leniently by Medicaid in years past—will simply no longer be available. request a price quote >>

Whether or not you will need it is a gamble, but statistics tell us that 65% of those who are 65 years of age now, will need some sort of LTC before they die. If you are one of them, and cannot pay, you and your family stand to lose everything you ever had. The following are some of the most common questions that people have about LTCi.

Q & A

Q. When will LTCi pay? Does it pay hospital bills?

A. LTCi does not pay the hospital. It pays for care needed if you become unable to take care of yourself for a long period of time. It pays nursing homes, assisted living facilities and home care agencies, depending on the terms of your policy.

Q. What if I need round the clock nursing? Can I get that at home?

A. Yes, if you have a high enough daily benefit, you can. But generally, if you need that much care, it will be cheaper in the nursing home.

Q. My mother had Medicaid. Can't I just rely on that?

A. Yes, you can, if you want your spouse to have a limited income, and are content to surrender your home and life insurance to the state upon your death.

Q. What is the elimination period?

A. You can think of that as a "time deductible" that lowers your premium. When you submit your first claim, you will have a specific time period, such as 60 or 90 days, before the policy will begin to pay.

Q. Doesn't LTCi cost a lot?

A. That depends on how you look at it. It becomes less affordable as you get older, and it is possible to have an occasional (not yearly) rate increase as health care rates escalate. If you take it out while you are in your 50s or 60s, you can assume that the amount of money it would take for one month in the nursing home will pay for 2 or 3 years of premium. No other form of insurance anywhere has so great a return.

Q. What if I never use it? Will I just lose all that money?

A. What if your house never burns down? Will your home owner's policy give back all the premium you paid? It's a chance you take. But it's far better to have it and not need it than to need it and not have it. And, many companies do have a return of premium rider that will pay you or a beneficiary if you never use the policy. That rider increases your premium significantly, however.

Q. How will I know that the benefit I choose today will cover me years from now?

A. It's difficult to tell. You can keep up with rising costs by adding an "inflation rider" to your policy. Then the benefit increases every year but your premium stays the same. That rider will make your policy much more expensive, however.

Q. I have some money. How do I figure out what kind of benefit I need before buying?

A. This is where a good LTCi agent is priceless. He/she will help you analyze your assets, determine what you could logically afford to pay without losing your home or jeopardizing your spouse's welfare. The benefit you take doesn't need to be 100% coverage. It needs to be enough so that whatever you can pay, in combination with your policy, will provide for your care.
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