Understanding Long Term Care Insurance

By Sally M. Wagley, Maine elder law attorney

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Have you been advised to purchase long term care (LTC) insurance? Before making such a purchase it is important to understand what such insurance will and will not cover. These are some of the things you need to know:

Nursing home-only coverage vs. coverage of assisted living and home care: Ideally, the policy should cover these different types of care. Most people prefer to be cared for someplace other than a nursing home.

Benefit “triggers”: Most policies will not start to pay out until you are very disabled, mentally or physically, and your care needs are high. These policies require that you be at the point that you need as substantial amount of help with at least three activities of daily living or be so mentally impaired that you are a danger to yourself or others.

Daily benefit rate: The policy will cover up to a certain amount per day: for example, $150, $200 or $300 per day. The higher the daily benefit rate, the more the policy will cost. Currently, nursing home care in Maine costs an average of $8000 a month, and some facilities charge as much as $10,000. Thus, your LTC insurance will likely not cover the full cost and you will need to use some of your income or savings.

Elimination period: Most policies will not start covering the cost on day one. The policy will require that you receive care for a certain number of days before it will start to pay: for example 30 to 90 days. This means that you will need to draw on your savings until the elimination period is over.

Length of benefit period: There are few if any policies these days that will cover you for your lifetime. Policies will generally cover your care for two to five years. This means that if you need care for longer than this, you will need to start paying from your savings.

Inflation protection: Long term care costs increase every year. If you decide to buy LTC insurance, you should consider opting for inflation protection so that years from now if you need care, the benefit amount will more closely match the cost.

The information provided on this website is for informational and educational purposes only. This information should not be construed as rendering legal advice or offering an answer to a specific legal problem.