Long-Term Insurance For Assisted Living | How Does It Work & Is It Worth It? [Complete Guide 2022]]

— Last Updated May 27, 2022

Long-Term Insurance For Assisted Living | How Does It Work & Is It Worth It? [Complete Guide 2022]]

In this article

— Last Updated May 27, 2022

Read Time
8 mins
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Reviewed by
Eric Berkman
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Long-Term Insurance For Assisted Living | How Does It Work & Is It Worth It? [Complete Guide 2022]]

Stephanie Wilson

Director of Operations

Read Time

8 mins
Group-27.png

Reviewed by

Eric Berkman

In this article

assisted living

Navigating the world of health insurance can be intimidating, and for good reason! There are so many things to consider; coverage options, changing deadlines, and hidden fees among many others. This is particularly true for vital healthcare that must last over a long period of time and once you’re later in life, such as long term insurance for assisted living. As the name suggests, long term insurance is an insurance policy designed to cover services and support that are long term such as custodial care.  It is also known as long term care insurance

An important aspect of long term insurance is that it can often help cover services that regular healthcare cannot. This makes it an essential care type for so many; as we age, it becomes more and more likely we will need daily assistance. In this article we will discuss all that you need to know about long term insurance, including how it can be used to help with assisted living. Let’s start with the most important question: what is long term insurance?

Basics of Long Term Insurance

Before you can truly begin to assess the importance of long term insurance for assisted living, you must know what long term insurance actually is! Keep in mind that working with a trusted insurance agent will be incredibly beneficial for navigating the confusing waters of healthcare.

Definition

Strictly speaking, long term inurances is used to cover and assist with the cost of long care services, as most traditional health insurance cannot and will not help cover long-lasting issues that affect one’s daily life activities. As you get older, it is more likely that you’ll require assistance in daily areas such as bathing and dressing.  Things like this are known as ADLs or Activities of Daily Living.  This can also extend into staying at assisted living facilities which is a place where you can receive care to help with ADL issues. Whether you are at home or in a facility, having long-term care services are vital to your health.

It is important to know that long-term care is not necessarily medical, but rather assists with frequent and necessary tasks. When finding your long-term insurance plan, you will decide on the coverage you need and pay premiums each month. A premium is the monthly payment you make to your insurance company. You pay premiums for long term insurance, and when you need a service like assisted living, it will be ready for you.

What It Covers

While coverage will vary between plans and companies, there are some basic ways to measure the need for long-term care that insurance typically makes sure to cover. These are divided into at least two categories: Activities of Daily Living or ADLs, and Instrumental Activities of Daily Living, or IADLs. ADLs are essential to everyday life, and can include the following:

  • Bathing
  • Dressing
  • Using the bathroom
  • Eating
  • Transferring, or moving from place to place

In contrast, IADLs are not as essential, but still required to have a good quality of life. These activities are more wide-ranging, and can include:

  • Using the telephone
  • Going grocery shopping
  • Caring for pets
  • Housekeeping
  • Managing medication

Most long-term care insurance policies will also cover needing to receive services in facilities outside of your own home. When you are unable to complete multiple ADLs, you qualify to receive the benefits from a long-term insurance policy if you have it. It can also cover the cost of caregivers coming directly to your home.  Note, long term care insurance will not cover the costs if you need some care or help for IADLs. Remember there is a lot of difference between long term disability vs long term care insurance.

Advantages

When you’ve been working to save towards retirement for many years, it can be frustrating to see medical and living costs eat into your savings. That is why many people recommend long term insurance. We may not imagine that we need it now, but when it comes time to use it, we will be glad to have it! Here are some of the primary benefits of long-term insurance. 

  • Flexibility. You will find that your long term insurance plan can be altered to fit your specific needs and wants. You can essentially guarantee as much or as little coverage as you need. 
  • Inflation protection. Health care prices can inflate and rise over the years, and long term insurance can be impacted due to it. Luckily, when you create the plan you can include inflation protection as a policy rider.
  • Affordable premiums, especially in comparison to care. To ensure you actually have long term insurance in place, you’ll pay a monthly premium. Other payments such as deductibles and copays will not go into effect until you actually need the long term care. Over the years, you’ll find that those premiums are a fraction of the cost of even one year of care services without insurance. 

Disadvantages

Just as long term insurance has advantages, you can expect some disadvantages. It is important to be aware of both aspects in order to make the best informed decision. Many disadvantages of long term care insurance involve the fact that it must be planned years in advance. You can still get long term care for your parents, it’s not to late to plan for them.

  • You may never need your insurance. There is a chance that you will never end up needing long term insurance, and the premium payments you consistently paid are essentially wasted. It is comparable to auto and home insurance in this way – there just in case, but not guaranteed to be needed.
  • Premiums may increase many years after they begin. While inflation protection is typically an option, it is not guaranteed with every plan. There is also a chance that insurance companies may need to raise premiums over time, after you begin working with them as a client due to changing company costs. 
  • There is a waiting period before benefits kick in. The waiting period changes depending on which plan you have and what carrier you have it with.  Once you begin needing long term care, you may need to wait up to 90 days before you’re able to access your benefits. 

Now, you can learn more about long term insurance while being aware of the pros and cons. Let’s move into the next aspect of long term care and ask the question: does long term insurance cover assisted living?

long term insurance for assisted living

Does Long Term Insurance Cover Assisted Living?

In sum, the answer is yes. The majority of plans will offer coverage at assisted living facilities as long as it is demonstrated that they will help with long term care. However, you cannot blindly assume that every plan and policy will include this coverage.

Understanding Long Term Insurance for Assisted Living

An assisted living facility is meant to provide care and oversight for the eldery who are mostly healthy, but require assistance for a few things. It is less intensive than a nursing home and solves many of the worries that come from living independently. If assisted living is something that you want to include in your long term insurance, you should make this clear from the start and discuss that with your insurance agent. 

Some long term insurance may only pay for facility services as opposed to in-home care, making assisted living all but guaranteed. The premium you pay to your company will eventually cover assisted living as well as general long term care. In the end, it is vital that you check your specific policy to ensure you will be able to use your long term insurance for assisted living. Consider finding a trusted insurance agent to help you navigate this.

When is Long Term Insurance for Assisted Living a Necessity?

When deciding on your long term insurance, you may assume that assisted living is not necessary. However, many people will need help of a caregiver, don’t have family to do this, and perhaps don’t feel safe getting care in their own home. 

Getting care at an assisted living facility is an option given these situations.   And while moving to an assisted living facility can certainly seem like a big jump, so it is important to consider as an option. Here are some reasons why long term insurance for assisting living can be needed:

  • Accidents, such as falls or injuries, can happen frequently when living independently. 
  • A lack of interaction and companionship from peers can lead to mental health suffering.
  • Driving for errands and visits can become dangerous, and the risk of an accident increases.
  • Caring for a loved one or being cared for by family can strain the relationship or not available at all.

These are just some of the reasons that long term insurance for assisted living is something to consider and could be a necessity. If you notice any of these signs, and you aren’t able to stay in your home, then it is important to find a quality assisted living facility as soon as possible. In general, it is best to include assisted living on your long term insurance coverage and part of your planning so you can be prepared. 

How Much Does Long Term Insurance for Assisted Living Cost?

The primary costs for long term insurance will come from monthly premiums. Depending on when you begin your insurance plan, you can pay these premiums for years! The good thing is that long term insurance for assisted living is not different from general long term insurance – choose the right plan, and your premiums will cover assisted living right off the bat. 

The premiums that you will pay vary depending on your age, gender, health status and the coverage you need. The older you are, the more likely you will need long term care, and health conditions typically start to creep up, and so this will likely lead to premium increases. In 2021, a single 55 year old man would pay about $950 a year. A single 55 year old woman would pay about $1,500 per year, and a couple that were both 55 would pay about $2,000 combined. It’s better to get long term insurance when you’re younger and still healthy so you can save on monthly premium. 

How Does Long Term Insurance for Assisted Living Work With Other Insurance?

Luckily, long term insurance for assisted learning is able to work with some other forms of insurance. While Medicare is the most obvious form of health insurance for the eldery, it covers inpatient and outpatient medicine and not long term care. However, Medicaid is an insurance program meant to assist those who are low-income. If you meet the threshold, Medicaid can help with long term insurance.

Today, you also have the ability to “bundle” your long term insurance with other forms such as life insurance. This is known as a hybrid policy. In the case of a hybrid policy, you would pay several annual payments in order to gain long term benefits. If you do end up using the benefits, you get all the same coverage as other plans as well as a smaller amount of life insurance to go to your heirs. 

What Are The Main Benefits of Long Term Insurance for Assisted Living?

While some people may wonder if long term insurance for assisted living is worth it, the statistics don’t lie. It is estimated that up to 70% of 65 year olds will need long term services at one point, according to a 2020 survey from the Administration for Community Living. That obviously shows how much you can truly benefit from long term insurance for assisted living. 

The main benefits include securing long term care as soon as you need it. With the exception of a wait period, your benefits will kick in fairly quickly. In addition, having long term insurance for assisted living will save you and your loved ones a fair amount of money. Without insurance, you could expect to pay thousands of dollars a month for assisted living. 

long term insurance for assisted living

Where Can I Find Out More and Get Advice on Long Term Insurance for Assisted Living?

Policy solver has knowledgeable, licensed agents, and is here to help you navigate through your long term care insurance journey. We are a team of professional insurance policy brokers and we can save you time and money, while finding the right policy for your specific needs.

Our experienced advisors will ask you a few questions to understand your unique situation and will come up with a comprehensive analysis of different insurance plans so they will be able to recommend the best policy at the best price for you.

Contact us or schedule a free consultation, and we will get back to you soon!

Sources:

Marquand, Barbara, and Barbara Marquand. “Long-Term Care Insurance Explained.” NerdWallet, 16 July 2021, https://www.nerdwallet.com/blog/insurance/long-term-care-insurance/. 

“Activities of Daily Living Measure the Need for Long-Term Care Assistance.” ElderLawAnswers, 20 Nov. 2015, https://www.elderlawanswers.com/activities-of-daily-living-measure-the-need-for-long-term-care-assistance-15395. 

“Long Term Care Insurance Pros and Cons.” Long Term Care Insurance Pros and Cons – Long Term Care Insurance, https://longtermcareinsurancepartner.com/long-term-care-insurance/long-term-care-insurance-pros-and-cons. 

Painter, Kim. “Making Sense of Your Long-Term Insurance Options.” AARP, 13 Oct. 2021, https://www.aarp.org/caregiving/financial-legal/info-2021/understanding-long-term-care-insurance.html. 

Cobb, Daniel. “Medicare Benefits for Assisted Living & Long Term Care.” Payment Options & Financial Assistance for Senior Care, PayingforSeniorCare.com, 19 Oct. 2021, https://www.payingforseniorcare.com/medicare. 

 

December 13, 2021

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