Long-Term Care Insurance


August 31, 2017

Long-term care insurance is designed to supplement your health insurance as well as Medicare and Medicaid should you or a family member require long-term care. These policies reimburse you a daily amount for services that assist with daily living, like bathing, dressing or eating. Before choosing a long-term care policy, there are some things you need to understand so that your family is protected.

Why Would You Need Long-Term Care Insurance?

Nursing home care is expensive. You may be under the impression that Medicare will cover the cost of your nursing home if your health deteriorates to that point. It doesn’t. Medicare does cover hospital stays, doctor services and medical supplies while you’re in a nursing home, but it won’t cover the cost of the facility itself or any care that you receive outside of medical need.

Medicaid may cover your nursing home costs, but only after your own funds are depleted. This means your assets must be low enough that you qualify as Medicaid coverage is based on your income. Since homes and vehicles are considered assets, they can be used to disqualify you for Medicaid. The government will not make you sell your home to pay for nursing home care, but Medicaid can place a lien against the home equal to the amount they spend on nursing home care. When you die, Medicaid can then collect what it is owed. It is possible that the balance you owe could be the entire amount of equity you have in your home.

Giving your home or selling it to a family member will not eliminate the possibility of a lien on your property if the sale or gift occurred within five years. There are exceptions to that rule, which you should discuss with an attorney or financial advisor, but it’s clear that this route would be a tricky one to navigate. Long-term care insurance can eliminate the risk of having to liquidate your assets or impoverish yourself just to cover the cost of nursing home care.

Protecting Your Spouse

Long-term care can also protect your spouse if you need nursing home care and your partner doesn’t. Medicaid does not require people to sell their homes to pay for a spouse’s nursing home care, but they can file a claim against either you or your spouse’s estate to recoup some of your nursing home costs. If you want to leave your assets to your family, long-term care coverage can help you protect your home, cars and savings from being depleted to pay for your care.

About Long-Term Care Insurance

Most people begin looking for long-term care insurance when they reach their 50s because insurance premiums start to increase, as does the likelihood that you’ll need long-term care. Premiums vary based on your health, age and other underwriting factors. The maximum daily benefit level, the length of stay covered by your policy and waiting periods before coverage starts can also affect your premiums. It’s best to purchase this type of insurance when you’re young. The average cost for a 60-year old couple with coverage up to $365,000 each for their lifetime would average over $450 per month. For a 55-year old couple, the price drops to less than $340 per month.

If you own no assets or are not concerned with leaving your assets to your family, long-term care insurance may not be worth the premium you may have to pay. However, if your assets are important, like if you live in a home that has been owned by your family for generations and want to pass it along to your family, long-term care coverage can help you protect those assets should you need to move into an assisted living facility or nursing home.