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Shawn McCammon
Shawn McCammon
Attorney at Law

Shawn McCammon is the founder and managing shareholder of McCammon Law. Shawn has been practicing for over 20 years, starting off in litigation before working in-house as a corporate attorney, and finally opening his own firm in 2009.

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What’s Long-Term Care Insurance?

October 3, 2020
According to the American Association of Retired Persons (AARP), roughly 50% of those aged 65 will need long-term care (LTC) one day. Long-term care insurance covers things not normally covered by regular medical insurance. This includes nursing home, assisted living or home care for those who need it, due to chronic conditions like dementia or other disabilities.

Bankrate’s recent article entitled “Long-Term Care Insurance” explains that when you reach retirement age, you may be wealthy enough to afford private health insurance which may be supplemented by Medicare. However, if you’re not as well off, you may qualify for Medicaid. All of these types of health insurance policies would cover acute healthcare needs, like surgery, doctor’s visits and prescriptions. They may even cover skilled nursing or rehabilitation for a short period of time. However, private health insurance and Medicare aren’t designed to be used for custodial care. In fact, they usually won’t cover it. While Medicaid may provide some long-term care in certain situations, it is usually not sufficient to cover your long-term care needs fully. Therefore, it should never be your first choice.

Long-term care insurance covers the extended, day-to-day costs of those who need help with daily activities, such as bathing, dressing, eating or handling toilet needs. This care may be provided in a senior living home, assisted living facility, daycare program, or in your own home.

There are two general types of long-term care insurance: traditional policies, which cover the basics of care and nothing else. These policies typically include a daily benefit of about $160 and have a three-month waiting period before benefits start.

Another kind of LTC insurance is a hybrid policy that includes some of the benefits of whole life insurance. These will pay out money to heirs, even if you’ve never used the long-term care insurance benefits. Unlike traditional policies, there are no rate increases because the premium is locked in at the start of the policy. However, hybrid policies are usually two or three times more expensive than the traditional policies.

LTC insurance doesn’t cover acute medical needs—that’s what your private health insurance, Medicare or Medicaid handle. Where long-term care insurance plays a role, is if you need extended care. It doesn’t only handle medical care, but also handles care that revolves around helping with daily activities that you’re no longer able to complete on your own, such as getting up, getting dressed, cooking and eating.

This insurance also covers nursing home costs for people who are no longer able to live alone, which may help protect and preserve your heard earned assets. In addition, your policy may cover skilled nursing as needed or rehabilitation care. However, you should read your policy to find out for sure exactly the scope of its coverage.

Age plays a significant part in determining your cost, and long-term care insurance premiums increase dramatically as you get older. You should buy LTC insurance before you actually need it. That’s because if you delay too long or until you’re actually affected by a debilitating condition, then you won’t qualify.

Most elder law attorneys believe that long-term care insurance is a good idea for anyone in their 50s and early 60s, and that it should be considered as part of your overall estate planning conversation, even though you may not opt for the coverage.

The American Association for Long-Term Care Insurance (AALTCI) recommends that you consider LTC coverage, while you’re in your 50s or younger and in good health. Both of these conditions make it more likely that you will be eligible for discounts that bring down the cost of premiums.

The length of a long-term care insurance policy’s benefits will depend on the policy’s terms of service, but most policies provide long-term care for up to five years.

Reference: Bankrate (June 18, 2020) “Long-Term Care Insurance”


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