Senior Care Insurance: Long-term Care Insurance for Seniors

If your elder loved one recently fell ill or experienced an injury, then you might know how valuable respite care can be. By providing them with specialized services and round-the-clock attention, respite care can turn a difficult situation into a manageable one and help your loved one regain their health. However, it can also be expensive, particularly when your loved one requires several months of care. This is why senior care insurance (or long-term care insurance) can pay off in the long run by covering added medical care expenses.

Understanding this type of coverage and considering your options beforehand will help make sure you’re not stuck trying to figure out how to pay expenses at the last minute.

What is long-term care insurance?

Long-term care insurance (LTC or LTCI) for seniors is insurance that will cover a variety of expenses associated with long-term stays, such as at a hospital, nursing home or a respite center. Long-term care insurance generally covers additional expenses not covered by Medicare or Medicaid and can be used as a supplemental insurance for seniors.

Although it is not a widely used type of insurance policy (only 8 percent of Americans currently purchase it), a LTCI policy can help protect against the rising costs of long-term care and keep you from being burdened with any unexpected expenses.

Who is eligible for long-term care insurance?

Whether or not you qualify for a LTCI policy will depend on your health, age and current living situation. In general, the younger and healthier you are, the more likely you will be able to purchase an inexpensive policy. Long-term care insurance premiums are generally less expensive at younger ages. Shopping for a policy between 60 and 65, starting at age 55 for couples, may get you the combination of monthly affordability and a lower total investment. If you have a pre-existing health condition, are not in good health or are at an at-risk age (sometimes the cutoff for long-term care insurance is 75), it's possible that you may not qualify for long-term care insurance or that your rates will increase.

The following are some commons reasons why your loved one may be unable to purchase long-term care insurance:

• They are currently using long-term care services
• They have Alzheimer’s or another form of dementia
• They have AIDS
• They have Parkinson’s Disease, multiple sclerosis or another progressive neurological condition
• They have suffered from a stroke in the past year or two

What to know when purchasing a LTCI policy

Whether you are interested in purchasing long-term care insurance for respite care or simply to be safe, the following are some important factors worth considering when evaluating term care insurance policies.

• Only buy as much as you need. If your loved one is healthy, won’t need a long respite stay, or has the income to pay privately for many of their services, there’s no reason for them to buy more insurance than they need. However, also make sure that the insurance they do purchase covers everything they require.
• Study the details of each policy. Some LTCI policies will only cover certain types of long-term care, and may refuse to cover respite care or some other service. Make sure you and your loved one are getting what you need.
• Take note of benefit amount, benefit period and elimination period. The benefit amount is how much the LTCI policy will pay out on either a daily or monthly period. The benefit period is the length of time the policy will pay this amount (usually measured in years). The elimination period is how long you or your loved one must pay for expenses before the policy kicks in.
• Look for non-renewal and/or cancellation guarantees. Before choosing any policy, you should require that it comes with a guarantee it cannot be terminated if you or your loved one experience a sudden deterioration in health.

What are the differences between long-term and short-term care insurance?

When considering the right senior care insurance to purchase, understanding the differences between short-term and long-term care insurance is helpful.

Short-term care insurance (STCI) for seniors typically provides coverage for 1-year or less. There are some major differences in terms of an older cutoff age for short-term care insurance and no medical exam to be approved for coverage. Also, most long-term care insurance includes an “elimination period” where benefits may not be paid out for 90 days where short-term care typically pays benefits immediately.

Here are some key differences between short-term and long-term care insurance for seniors:

Long-term care insurance providers

There are a variety of long-term senior care insurance companies on both the federal, state and local levels. Additionally, many seniors opt to carry private insurance plans for LTCI.

Here are some of the major long-term care insurance providers:

• Pacific Life
• Nationwide 
• Northwestern Mutual
• Metlife
• State Farm
• Mutual of Omaha
• New York Life

Additionally, consider the following resources to find a policy that fits your needs:

• Use an insurance specialist. One of the easiest ways to purchase a LTCI policy is to do it directly from a provider. Find out which providers offer this type of insurance by contacting your state’s Department of Insurance.
• Use Medicaid or Medicare. If you meet the age and financial requirements, you may be able to purchase a LTCI policy through a partnership program with either Medicaid or Medicare.
• Use your employer’s insurance. In many cases, you may be able to find a policy through the insurance you already have through your employer. This may also make it easier to qualify for a LTCI policy.

Another Option, Annuities with Long Term Care Rider Options

Annuities are conservative investments issued by insurance companies that can help build a guaranteed income stream or supplement retirement savings. A long-term care rider is an optional benefit you can add to an annuity that helps cover long-term care expenses. You can access the benefit right away, or if you end up not needing it, you can pass it on to your beneficiaries. To access this benefit, you must need help with activities of daily living, such as eating, getting dressed, taking a shower or bath, using the bathroom or moving from one place to another. The health condition can be permanent or temporary.

 Finally, you can always consider the ARCH National Respite Network, which has a resource for finding information about state funding sources for both caregivers and seniors.