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What Is Long-Term Care Insurance?

Senior woman reading paperwork in her senior living apartment

According to the U.S. Department of Health and Human Services, 70% of seniors ages 65 and older will need some type of long-term care. With an average stay of approximately three years, the costs are staggering. How so? The average cost of long-term care is $225 a day or $6,844 per month for a semiprivate room in a nursing home. These costs are conservative, and they’ll most likely rise every year.

While most traditional health insurance policies cover things such as visits to the doctor’soffice, hospital stays, medical procedures and prescription drugs, they don’t cover long-term care services, including nursing home stays, memory care or assisted living.

So let us answer a few questions, such as “What is long-term insurance?” “What does long-term care insurance cost?” and “Is long-term care insurance worth it?”

Long-term care health insurance (also known as LTC insurance) is designed for individuals ages 65 and older to help cover the exorbitant costs of long-term care that requires constant supervision. Most long-term care is not medical care, but rather assistance with activities of daily living, such as dressing, bathing, eating and personal care, and they can be provided in a variety of settings, including your home, skilled nursing home or an assisted living apartment.


What Does Long-Term Care Insurance Cover?

Not all policies are the same, but in general, a long-term care policy covers these types of expenses:

  • Skilled nursing home care
  • Assisted living
  • Memory care
  • Adult day care services
  • Occupational, physical and speech therapies
  • In-home health care
  • In-home health aide to assist with activities of daily living
  • Home modification
  • Care coordination
  • Hospice and respite care services


When Should You Get a LTC Policy?

As with purchasing life insurance, the older you are, the higher the premiums you pay. That’s why many experts recommend you get long-term health care insurance when you’re young as part of your overall financial planning.

For instance, getting a standard three-year long-term care policy at age 45 compared to age 60 can save you around $440 a year in premiums. As well, most long-term care insurers require you that you pass a physical exam before they’ll insure you. By waiting until you’re 60, the odds are much higher you’ll have a health concern that’ll significantly raise your premiums or prevent you from qualifying for coverage.


And How Much Does Long-Term Care Insurance Cost?

Good question. The answer is it varies greatly, and it isn’t cheap. A lot of factors go into determining how much you’ll pay for a long-term care policy. They include:

  • As mentioned above, your age at the time of purchase. Generally, the younger and healthier you are, the lower your premiums will be.
  • The maximum benefit the policy will pay per day for care. Some policies can pay different amounts for different services, while others have a flat-rate benefit no matter what long-term care services are being received.
  • The maximum number of days (years) that a policy will pay out benefits — note that the number of days times the daily maximum is the policy’s lifetime maximum benefit. Two to five years of benefits is a common time frame.
  • The length of the elimination period (waiting period) before your benefits kick in. This is the LTC equivalent of a “deductible,” and 30-, 60-, and 90-day waiting periods are common. It means that if you have a 90-day elimination period and you need long-term care, the costs for the first 90 days of care come out of your pocket. You can opt for a shorter elimination period, but your premiums will be significantly higher.
  • Any optional benefits you choose, such as inflation protection. For a slightly higher premium, you can increase your benefit at a specified rate, such as 5% annually.

To give you an example of how much LTC insurance costs, the average annual premium for a 60-year-old couple is $3,490 for a plan with an initial benefit of $150 per day for up to three years and a 90-day elimination period, according to the 2018 Long-Term Care Insurance Price Index, prepared by the American Association for Long-Term Care Insurance.


Is Long-Term Care Insurance Worth It?

That’s another good question and one that comes down to a personal decision. There isn’t a “one best long-term care insurance policy” because everyone’s needs are different. While long-term health care insurance can provide peace of mind and protect your nest egg from being depleted, it does have a few drawbacks.

With the rapidly rising cost of long-term care, will the policy you purchase today provide enough to cover your future needs? On the other hand, you may need less care than your benefit period provides, but you’ve already paid for it.

As well, there’s currently no certainty in pricing. LTC insurance is relatively new in the insurance world, and how to properly price different plans is widely debated among long-term care insurance companies. That means premiums offered now could rise over time.

The fact of the matter is that most of us will require some sort of long-term care in the future. Another fact is that these services are very expensive. So is long-term care insurance worth it? Is there a better option?


A Wise Alternative

A great option to LTC insurance is Regency Oaks, an active independent senior living community in Clearwater, Florida, where you can enjoy today without worrying about tomorrow.

Regency Oaks offers the advantages of Life Care, which secures a lifetime of quality health care at lower-than-market rates. This means you can live a fuller, happier lifestyle while protecting you against the high costs of long-term care.

With Life Care, you’ll have access to a full continuum of exceptional care, such as assisted living, memory care, and long-term skilled nursing care and rehab — all at predictable rates for the rest of your life — all in a community that surrounds you with great friends and first-class amenities that make life easier and more enjoyable.

Learn more about the freedom and long-term security that Life Care at Regency Oaks provides. It’s one of the smartest ways to take control of your future.