Long-Term Insurance For Assisted Living | How Does It Work & Is It Worth It? [Complete Guide 2023]

Long-Term Insurance For Assisted Living | How Does It Work & Is It Worth It? [Complete Guide 2023]

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— Last Updated May 27, 2022

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8 mins
Reviewed by
Eric Berkman

Guide Long-Term Insurance For Assisted Living | How Does It Work & Is It Worth It? [Complete Guide 2023]

— Last Updated May 27, 2022

Stephanie Wilson

Director of Operations

1564577429221

Reviewed by

Eric Berkman

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

It is important to know that long-term care is not necessarily medical care, but rather assists with frequent and necessary daily 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 payment you make to your insurance company. You pay monthly premiums for long-term insurance, and when you need a service like assisted living and homemaker services, it will be ready for you.

What It Covers

While covered care 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, such as assisted living care in a dedicated facility. 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 spent a long period of time building up retirement savings, it can be frustrating to see medical costs and long-term assisted living costs eat into those savings and ruin your retirement planning. 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 options 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. When you do need care, you’ll find that those premium costs are a fraction of the annual costs, 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 too late to plan for them.

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?

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 individual 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 elderly who are mostly healthy, but require assistance with a few personal or household tasks. It is a less intensive type of care than a nursing home facility’s care and solves many of the worries that come with living independently. If assisted living is something that you want to include in your long-term care insurance plan, 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.

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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 skilled 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 put strain on the relationship or is not available at all.
  • Your usual caregiver at home is no longer able to assist you.

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 premium payments. 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 long-term care 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 premiums.

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

Luckily, long-term insurance for assisted living is able to work with some other forms of insurance. While Medicare is the most obvious form of health insurance for the elderly, it covers inpatient and outpatient medicine and not the long-term costs of care. However, Medicaid is an insurance program meant to assist those who have limited income. If you meet the threshold, you may be able to receive Medicaid long-term care services.

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.

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 type of 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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