As you get older, you may find yourself slowing down and having a little more trouble doing tasks like raking leaves, shoveling snow and mowing the lawn. Even if you’re in good health now, you also have an increased risk of certain health problems as you age. As a result, you may need some type of long-term care in the future.

Although long-term care is extremely beneficial, it’s also expensive, and not everyone has enough money in their retirement accounts to pay for several years’ worth of care. To make matters worse, health insurance doesn’t cover most long-term care services. Fortunately, insurance companies now offer long-term care policies to help you plan for the future. Keep reading to learn more about long-term care insurance and find out why you should purchase it.

What Is Long-Term Care?

Long-term care refers to all the services a person needs to meet their personal and/or medical needs. Older adults often need some type of long-term care due to changes in their physical or mental functioning. People with disabilities may also need long-term care to help them maintain their independence.

Types of Long-Term Care

Some types of long-term care are delivered in a home setting, while others are provided in residential facilities. These are some of the most common types of long-term care available:

Unpaid Family Care

For adults who need a limited amount of assistance, family members may pitch in and help with housekeeping, grocery shopping and other tasks.

Personal Care 

Even when older people are in good health, they may have vision impairments, difficulty maintaining their balance or other problems that make it difficult to perform certain activities. Personal care aides provide assistance with cleaning, cooking, shopping and activities of daily living.

Home Health Care

Home health agencies have licensed professionals available to provide in-home medical services. For example, a home health nurse may come to someone’s home to administer injections or perform diabetic wound care. Physical therapists, occupational therapists and other health care professionals also provide in-home services. Home health care differs from personal care because it’s provided by trained medical professionals.

Adult Day Care

Adult day centers give older adults and adults with disabilities a place to go when their regular caregivers are at work or otherwise occupied. These centers offer ongoing supervision, activities and opportunities for socialization. Some programs even offer healthcare services, making it easier for participants to stay healthy.

Assisted Living

Residents of assisted living communities have access to a variety of personal care services, including meal preparation and housekeeping. Some communities also offer assistance with medication administration or provide some limited health care services.

Nursing Homes

Some adults need around-the-clock medical care. Nursing homes have physicians, nurses, physical therapists and other medical professionals on staff to meet each resident’s physical and psychological needs.

Continuing Care Retirement Communities

CCRCs provide several levels of care on the same campus. For example, a CCRC may provide independent living, assisted living and nursing home care all in one place. If your needs change after you move in, you can simply move to a new room or apartment instead of having to find a completely new place to live. Some CCRCs also provide memory care, which is designed for adults with Alzheimer’s disease and other forms of dementia.

The Cost of Long-Term Care

Genworth Financial does an annual survey to determine the median cost of care in each state and at the national level. For 2021, the survey revealed that the median cost of home health care in the United States was $5,148 per month. Homemaker services cost slightly less ($4,957 per month). While assisted living had a median monthly cost of $4,500, nursing home care was much more expensive—$7,908 per month for a semi-private room and $9,034 per month for a private room.

Will You Need Long-Term Care?

No one can predict the future, but based on current data, there’s a good chance you’ll need long-term care at some point in your life. The Administration for Community Living reports that someone turning 65 today has a 70% chance of needing long-term care in the future, and 20% of today’s 65-year-olds will need long-term care for at least 5 years. This includes unpaid care provided by family members, services provided in assisted living facilities and full-time care provided in nursing homes.

Does Health Insurance Cover Long-Term Care?

Most health insurance plans, including Medicare, provide limited to no coverage for long-term care services. For example, Medicare only covers medically necessary services, which don’t include the custodial care provided by nursing homes. Your Medicare plan may cover skilled nursing care following an illness or surgical procedure, but it won’t cover general nursing home care.

Medicaid covers nursing home care, but you must meet your state’s financial requirements to qualify for coverage. The income and asset limits are quite low, which means many people aren’t eligible for Medicaid. Even if your insurance plan covers home health care or other types of senior care, it may not cover all the services you need, leaving you with significant out-of-pocket expenses. That’s why long-term care insurance is so important.

What Does Long-Term Care Insurance Cover?

Long-term care insurance is designed to cover services that aren’t covered by your health insurance. This typically includes personal care and custodial care. It doesn’t cover most types of medical care, as your health insurance plan should cover anything that’s deemed medically necessary. A long-term care insurance policy may cover the following:

• Respite care: If a family member provides most of your care, respite care can give them a short break to rest or take care of personal obligations.
• Memory care: For adults with dementia, memory care facilities provide structured programs designed to keep residents safe and help them preserve as much of their cognitive function as possible. Memory care facilities offer a wide range of services, such as art therapy, music therapy and group activities.
• Hospice care: If you develop a life-limiting illness, hospice care can help you maintain your quality of life for as long as possible.
• Adult day care: Long-term care insurance may pay for you to go to an adult day center at least once per week.
• Assisted living: Depending on the terms of your policy, long-term care insurance may cover the costs of room and board at an assisted living facility.
• Nursing home care: Long-term care insurance typically covers the custodial care provided by nursing homes.

How Much Does Long-Term Care Insurance Cost?

Like other types of insurance, the cost of long-term care coverage depends on several factors, including your age and where you live. Women tend to have higher premiums than men because they have a longer life expectancy. You can also expect to pay more for your coverage if you have a history of chronic health issues. The American Association for Long-Term Care Insurance performs an annual price index survey to determine the average annual premium for this type of insurance. Here’s what they found in 2021:

• For a 55-year-old man in the “Select Health” category, it costs an average of $950 per year to carry a policy with a $165,000 level benefit. For a single female, the same coverage costs an average of $1,500 annually.
• For a policy valued at $298,900 in benefits by the time the insured individual reaches the age of 85 (2% growth in benefits each year), the average premium was $1,750 per year for a single man and $2,815 for a single woman.
• Married couples paid an average of $2,080 per year for a policy with a $165,000 level benefit.

Questions To Ask When Choosing Long-Term Care Insurance

With so many companies offering long-term care insurance policies, it can be difficult to find the right coverage. Before you start shopping, answer these questions to help you narrow down your options and ensure you understand exactly what type of policy you need.

How long of a waiting period are you willing to accept? 

In most cases, you can’t buy an insurance policy and start using your benefits the very next day. You have to pay your premium for a certain number of months or years before you can use your coverage. The longer the waiting period, the lower your premium.

How much does home care cost in your area? 

Long-term care policies often have a maximum daily benefit for home care, so it’s important to research the costs of care in your area before you purchase coverage.

Do you want a comprehensive long-term care insurance policy, or do you want a policy that only covers nursing home care?

Just as other types of insurance, you can customize your policy to meet your needs. Be sure to talk to your agent if you have specific interests or things you hope to avoid. 

How much does nursing home care cost in your area? 

Your policy is also likely to have a maximum daily benefit for nursing home care, so be sure to research average costs in your city or state before making a decision.

Can you afford to pay for inflation protection? 

There’s a good chance that long-term care will be much more expensive 10 or 20 years from now. As a result, your benefits may not cover as much as you anticipated. Inflation protection increases your maximum daily benefits each year, giving you some additional protection.

Long-Term Care Insurance: A Different Kind of Insurance 

With the growing costs of aging, health insurance often leaves policyholders with major gaps. Long-term care insurance helps fill those gaps by providing coverage for assisted living, nursing home care, hospice, memory care and hospice. While no one likes to think about these unfortunate parts of aging, a little planning now can make all the difference if you or your loved one may need assistance in your older years. 

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