What You Need to Know Before Buying Long-Term Care Insurance

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At some point, providing care for a senior will go beyond what family members can provide at home. They may need care in an assisted living situation, a nursing home, an adult day care, or a hospice. Care can assist with getting dressed, eating, bathing, and daily living.

Medicare does not pay for long-term care. USBank says Medicare will cover skilled care for up to 100 days in a nursing home when you are recuperating—usually after staying in a hospital. Before buying long-term care insurance (LTCI), there are some things you need to know to be able to make wise decisions.

The Choices You Must Make When Buying

When you buy a long-term care insurance policy, you need to make several decisions about the type of care you want and the payout details. Each decision affects the cost of the premiums and the kind of benefits you will receive.

You will need to decide when to buy the policy—the earlier you get it, the less expensive it will be. You must also be in rather good health before applying because medical underwriting is involved. Rates will probably be higher if you are not healthy, or you may not be accepted at all.

It is also necessary to decide, LongTermCare.gov says, about how much the policy is to pay out per day and for how many days (or years) at that rate. Of course, the amount you choose per day affects the total length of benefits that can be obtained from the policy since you also select a maximum benefit limit.

Consider the Length of the Benefits

Policies usually offer coverage lasting from two to five years. Women should be covered for 3.7 years because they live longer, and men for 2.2 years. A few companies offer lifetime coverage, but there are not very many.

The Costs Vary Considerably for Men and Women

Because men do not usually live as long as women, LTCI coverage is less expensive for them. Forbes says the average cost for a 60-year-old man to get $165,000 in coverage is $1,200 annually. A 60-year-old woman must pay $1,960 per year for the same coverage.

Married couples can save money when they buy a joint policy. Although it is less expensive—at 60, they can pay $2,550 per year—the coverage only provides $165,000 coverage for both—not each.

The Cost Is Not Guaranteed

The cost of long-term care may change. When you buy a long-term care policy, you are paying for the cost of services around that time. Unfortunately, the expenses in this field can often increase rapidly. When they do, you will see an increase in your premiums. Even the best policies do not guarantee that the rates will stay the same.

The TritonFinancialGroup says it is possible to buy a policy and find out 10 years later that you can no longer afford it. If you cancel it, you will probably lose what you put into it.

Medicaid Can Help Pay for Long-Term Care

The primary way to pay for a stay in a long-term care facility is through Medicaid. Because Medicaid helps low-income people, there is a low-income requirement. It means that most people either need to get rid of most of their assets or find a way to protect them from the spend-down requirement.

There are several ways to protect your assets and hard-earned money, but strict laws govern how you must do it. Also, Medicaid looks back over the previous five years at your finances and assets to discover how you disposed of them. If you did not do it right, you could be rejected for coverage.

You May Need to Pay for Benefits Before Getting Reimbursed

A long-term care insurance policy usually has a waiting period before sending out reimbursement checks. Most people pay for the costs for 60 or 90 days before the insurer starts covering the bills. Kiplinger mentions that LTCI policies usually do not cover rising costs, but for an extra fee, you can get coverage for it.

The average cost nationwide for nursing home care, Kiplinger reports, rose 2.4 percent in a single month—July 2023, which was unusual. Rarely do these costs ever decrease.

Besides the actual costs of nursing home care and long-term care insurance, there are also out-of-pocket costs. These typical costs usually run about $7,000 each year.

Long-Term Care for Veterans

Veterans can get long-term care through the U.S. Department of Veterans Affairs. The AARP says they provide nursing home care, but are increasingly looking to provide non-institutional settings.

Part of Long-Term Costs May Be Tax Deductible

You may be able to deduct some of the cost of long-term care if you itemize, NerdWallet says. To deduct the premiums, which would come under medical deductions, singles would need more than $13,850 in deductions, heads of households would need more than $20,800, and married couples filing jointly would need $27,700. In 2024, the numbers are higher. Single filers would need more than $14,600 in deductions, heads of household need $21,900, and married filing jointly need more than $29,200.

There is no doubt about it, long-term care insurance is costly and can be complicated. Multiple plans allow you to buy different levels of coverage that can reduce your premiums. Before you buy, talk to an estate planner or financial advisor to learn what you need to know and what plans are best for your needs. Remember to get multiple insurance quotes because each insurance company charges different rates.

The Epoch Times copyright © 2023. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.