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How Does Long-Term Care Insurance Work With Senior Living Costs?

Senior woman discusses long-term care insurance with daughter.

Using long-term care insurance to help with senior living costs

As you think about planning for the future, you may wonder what will happen as your parents and other loved ones age. Will they need senior health care such as assisted living or skilled nursing at some point? It goes without saying that, if they do, you’ll want the best possible care for them. Yet, if you’ve started researching the options, you’ve no doubt learned that in-home care, assisted living, memory care and skilled nursing can be expensive — and options that seem more affordable on the surface may not always be the best. If you’re concerned about paying for your or your loved one’s future needs, a long-term care insurance policy may help.


What is long-term care insurance?

Unlike a health insurance policy, which provides coverage for medical care and medications, or Medicare, which only covers short nursing home stays or limited home health care services, a long-term care insurance policy can help cover the cost of in-home care, assisted living, memory care or skilled nursing.If you’re wondering what those costs could be, consider Genworth’s 2019 Cost of Care Survey, which says “the national annual median cost of care now ranges from $102,200 for a private room in a nursing home to $19,500 for adult day health care services (based on five days per week per year).” The survey also notes that national annual median rates are $52,624 for home health aides and $48,612 per year for assisted living facilities. Long-term care insurance can go a long way toward easing this burden.


What are the benefits of having long-term care insurance?

According to AARP, “52% of people who turn 65 today will develop a severe disability that will require LTSS [long-term support and services] at some point.” That’s a better than one-in-two chance you’ll need care — and the odds are even higher for women.For many people, the choice of when and where to receive care will ultimately be driven by affordability. Without a long-term care insurance policy, you’ll either have to pay out of pocket or rely on Medicaid, which is only available for people with low incomes and only after most of their savings have been exhausted. You also may be forced to choose lesser-quality care in exchange for affordability. In contrast, having a long-term care policy in place may provide more flexibility in choosing the care you need and want, while also helping you save money. Some long-term care insurance policies also come with tax advantages. According to NerdWallet.com, “The federal and some state tax codes let you count part or all of long-term care insurance premiums as medical expenses, which are tax-deductible if they meet a certain threshold.” When shopping for a policy, keep in mind that only premiums for “tax-qualified” policies will count toward this deduction. Consult your tax advisor about your personal situation.


What can a long-term care insurance policy cover?

Each policy is different and each will have its own rules and requirements for the types of services they’ll cover, so it’s important to think about your health, lifestyle, resources for other types of care, and make sure the policy you choose will provide benefits for the services you may need. Policies may include — or exclude — coverage for:

  • home care
  • assisted living
  • skilled nursing care (i.e., a nursing home)
  • adult day care services
  • home modification
  • care coordination
  • future services

Policies will explain their requirements and what they specifically cover, such as requiring licensed skilled nurses to perform home care; however, with the right policy, you’ll have options you can afford.


When should I consider purchasing long-term care insurance?

As with most things in life, it’s helpful to begin planning sooner rather than later. Your eligibility and benefits will be affected by several factors, including your age, gender, health, marital status, and the amount of coverage you desire. Since the physical factors carry significant weight in an insurance company’s decision of whether or not to offer you coverage — and how much to charge for that coverage — it’s best to put a policy in place as early as possible. Many policies also deny claims related to preexisting conditions, which is another reason to apply for a policy when you’re younger.When budgeting for your long-term care insurance policy, keep in mind that premiums aren’t usually guaranteed to remain the same over your lifetime, so it’s a good idea to anticipate price increases. Your insurance agent may be able to give you an idea of what to expect.


What types of policies are available? 

There are an array of long-term care insurance policies, so it’s important to shop around for one that will fit your budget and satisfy your anticipated needs. A licensed insurance broker can be a great local resource for finding the policy that’s right for you, but here is a breakdown of some of the policy types you may find:

  • Individual: An individual plan is usually sourced and purchased through a licensed insurance broker. Find one who has specialized training in long-term care plans.
  • Employer-sponsored: If you’re still employed and your employer offers access to long-term care insurance plans, you may be eligible for a discounted rate. In addition, you can often keep your plan even if you leave your employer or they stop offering the policy. Many of the policies offered by employers may also be underwritten, meaning you won’t be subject to a medical screening.
  • State partnership programs: By collaborating with your insurance agent to choose a policy that is eligible for a State Partnership Program, you may be able to retain some of your assets without being disqualified from receiving Medicaid.
  • Joint policies: A joint policy is a single policy that can be purchased by two individuals, such as spouses. These policies usually have a maximum benefit amount that can be split between the two insured individuals. This means if one spouse needs care and the other doesn’t, the first spouse can access the full amount of the benefit.
  • Plans offered by organizations: Similar to employer-sponsored policies, these policies are often offered at a group rate to members of an organization or association. They may have guidelines that are similar to policies offered by employers, but be sure to read the fine print.

Using long-term care insurance for assisted living or memory care can greatly reduce your costs. Explore Freedom Village of Bradenton’s assisted living and memory care services, and call us at 941-210-6153 to learn more. We’ll be happy to answer all your questions.