Long-term Care Insurance

What are 'Partnership for Long-Term Care' programs?

Medicaid is a state-government-administered program that pays the medical and long-term care expenses of poor people. If you have more money than your state permits when you need long-term care services, your state’s Medicaid won’t pay for those services. You’ll have to spend your own money–including using up your assets–until you become poor enough to qualify.

Should I invest the amount I would pay in premiums instead of buying long-term care insurance?

If you're under 55, you might think that, since the likelihood of long-term care outlays is many years in the future, you could invest the money you might otherwise spend for long-term care insurance premiums. That way, if you do need long-term care, you could just draw upon that investment, and if not, you’d have money for your heirs, for a charitable donation, or for your own needs.

How can I save on long-term care insurance?

The tips below will help you save money wisely, but don’t rely on price alone.

Key factors in choosing a policy

Company financial stability - Because you may not collect for decades to come, be sure to buy from a company that has been around for some time and is financially stable. You may want to look up, from an independent rating agency, the financial strength ratings of a company you're considering.

What features of long-term care policies should I focus on?

There are various questions and issues to keep in mind when choosing a long-term care policy.

Where may care occur?

The best policies pay for care in a nursing home, assisted living facility, or at home. Benefits are typically expressed in daily amounts, with a lifetime maximum. Some policies pay half as much per day for at-home care as for nursing home care. Others pay the same amount, or have a "pool of benefits" that can be used as needed. 

What's the best age to buy long-term care insurance?

In general, it's a good idea to buy long-term care insurance before you’re 60, for two reasons:

  1. The younger you are, the less likely it is that you’ll be rejected when you apply for the policy. If you apply in your 50s, there’s a one in ten chance you’ll be rejected. If you apply in your 60s, the chance of rejection is two in ten. If you apply in your 70s, the chance of rejection is four in ten.

How much does long-term care cost?

The fact that you might need long-term care doesn’t mean that you have to pay someone to provide it. Many people who need help get it for free from a relative or friend, usually at home. In a recent survey of people over 50, roughly 90 percent said they expect to be the primary caregiver if their spouse or partner needs long-term care.

Should I buy long-term care insurance?

If you need long-term care services and have to pay to obtain them, what financial resources could you call on? Do you have enough to pay for four or more years in a nursing home, an assisted living facility, or home health care?

If you’re over 65, don’t rely on Medicare or private health insurance. Medicare doesn’t pay for custodial care, and private health insurance rarely pays any of the cost of long-term care.

What is 'long-term care'?

Because of old age, mental or physical illness, or injury, some people find themselves in need of help with eating, bathing, dressing, toileting or continence, and/or transferring (e.g., getting out of a chair or out of bed). These six actions are called Activities of Daily Living–sometimes referred to as ADLs. In general, if you can’t do two or more of these activities, or if you have a cognitive impairment, you are said to need “long-term care.”

Will I need long-term care?

Even over 55, only a small percentage of the population will need long-term care before they are in their 70s or 80s.