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Long-Term Care for Seniors

The federal government says about two-thirds of us will need long-term care. This care is very expensive, and is not usually covered by health insurance, disability insurance, or Medicare.  So how will you pay for this care if you need it?

One option is to purchase long-term care insurance. This coverage pays for your care when you can no longer perform normal activities of daily living like bathing, dressing, feeding yourself, getting from a bed to a chair, and using the toilet or if you develop cognitive impairment. If you are eligible for the home health or community care services of long-term care insurance, it will also pay for services like helping with household tasks, meal preparation, and grocery shopping. 

If you meet the eligibility requirements, the cost of an assisted-living facility is covered by long-term care insurance. However, some assisted-living facilities require residents be able to perform most of the daily living activities noted above. This requirement would not allow the costs of those facilities to be covered by long-term care insurance.

Long-term care insurance itself can be very expensive, and the number of companies providing this insurance has dropped over the past several years as the cost of paying for the care has risen.  Policy holders have sometimes been hit with large premium increases.

On the other hand, paying nursing home expenses can quickly deplete your life savings, leaving you dependent on Medicaid and leaving nothing to your heirs.

Here are some other questions to ask if you are thinking about buying long-term care insurance:

What types of care does long term care insurance cover, and what doesn’t it cover?
Comprehensive long-term care policies typically cover skilled nursing care, intermediate care, custodial care, adult daycare, and hospice care. Policies will cover care performed in facilities such as nursing homes, assisted living facilities, and hospice facilities as well as care performed in the insured’s home. Policies do not cover pre-existing conditions, mental or emotional disorders (except for clinically diagnosed Alzheimer's disease or related degenerative or dementing illnesses), alcoholism and drug addiction, or self-inflicted injuries.

What is the typical cost of a year in a skilled care nursing home?  Will my insurance cover all of these costs?
The 2013 Genworth Cost of Care Study reported that the cost of a semi-private nursing home room in Pennsylvania in 2012 was about $95,000, the cost of a one-bedroom assisted living facility was about $38,000, and the cost of a home health aid was about $46,000. These costs must be paid by the policyholder during the policy’s elimination period (typically, the first 90 days of care). The policyholder will also be liable for costs that exceed the policy’s daily or monthly payment limit.

How much does long-term care insurance cost at my age? 
The cost of a policy varies greatly depending upon the insured’s age, gender, marital status, elimination period, benefit period, daily policy limit, and inflation protection options. Please see an insurance agent for more details.

Can my policy be cancelled if I pay my premiums on time and can my premiums increase? 
Your policy cannot be cancelled if you pay your premium on time but your premium may go up in the future. Long term care insurance is designed to be a level premium product but the insurer can raise premiums if losses are greater than anticipated.  Click on the link at the end of this Q&A to see the latest approved rate increases for long term care insurers in Pennsylvania.  Any rate increases will affect all insureds in your policy class – you cannot be singled out for an increase based upon an adverse change in your health.

If fewer companies are selling long term care insurance, how can I tell if the company I’m considering has the money needed to pay my bills if I need it to?
You can learn more about the financial strength of insurance companies here.

What is a long-term care partnership policy?
The Long-Term Care Partnership Program is a joint federal-state policy initiative designed to promote the purchase of private long-term care insurance, minimize the costs of the Medicaid program, and allow policyholders to pass assets to their heirs. The asset protection offered by the program is dollar-for-dollar -- every dollar of coverage that your long-term care policy provides allows you to keep a dollar in assets that normally would have to be spent down to qualify for Medicaid.

For example, say a Pennsylvania resident buys a Long-Term Care Partnership policy from a private company, uses the insurance, and exhausts the policy’s $300,000 in benefits and then qualifies for Medicaid. The policyholder will then be able to bequeath $300,000 of his assets to his heirs without fear of Medicaid asset recovery.

Visit our long-term care page for more information on coverage options.