Long Term Care (LTC)

65% of people aged 70 and older will experience a long term care event, requiring some form of care assistance. When this happens, the costs of care can be as high as $100,000 a year depending on where you live and where you receive care. Long Term Care Insurance could cover the bulk or all of those costs.

What is long term care?

Long Term Care refers to the care services needed when you or a loved one may be unable to care for any one or more of the following basic Activities of Daily Living (ADLs):  

  •  personal hygiene 
  •  grooming 
  •  dressing 
  •  toileting 
  •  transferring or ambulating (walking or moving around without assistance) 
  •  eating 

Any of these can occur at any point in one’s life, but are typical as people age.    

Making a Plan 

Planning to make sure that you or a loved one will have the help needed is something that involves research, conversations with family (and/or friends), in order to determine how and where the care will be administered, and by whom.  

Some people will have the luxury of a family member who will provide their care services and therefore take care of them when they have an ADL issue. However, this could result in that family member having to live with them for a long period of time until the ADL issue is resolved, or in perpetuity, depending on the situation.  

Other people may solicit the services of a Long-Term Care provider (a facility they move into to get the care they need, or a long-term care worker who comes into their home and either helps during certain times of the day or one who lives with them). 

Regardless of how, where, and what type of care services are provided, if the services are rendered from anyone other than a family member, the costs will typically be very expensive. 

Some people will have the option to self-fund / use their own savings to pay for the services, but that will likely result in not having any savings to leave their heirs and they might not have enough to cover their care costs.  

For many people, purchasing a Long-Term Care Insurance policy can provide the comfort from knowing care costs will be covered, preserving their savings, and eliminating placing the care burden on their loved ones.  

Looking for a consultation? Get started with a Policy Solver representative.

Who would benefit from Long Term Care Insurance?

If you will not be able to pay for your long term care needs from your savings or investments, or you will not be able to rely on family or friends to take care of you or your loved one’s when you have a long term care event in your life, then long term care insurance could be a product that help you cover your expenses. 

The good news is most long term care insurance policies will cover most or all costs associated with the care you will need to have,

and you’ll have the option of staying in your home or going to a facility, whether that’s an assisted living or nursing home. It can also be used if you decide to transition or move from one care location to another, whether it’s in the same state or not. The only thing that might vary will be the costs of the care itself.

Long Term Care may help:

Pay costs to help you live where you want – at home or a facility

Reduce financial burden on family members

Protect your savings

Looking for a consultation? Get started with a Policy Solver representative.

How Long Term Care Insurance Works:

If you want to buy a long term care insurance policy, you will need to fill out an application, answer some health related questions, and then have a conversation with a licensed long term care insurance professional. Depending on your situation, you may also be asked to provide some medical records as part of the process. The answers you provide will help inform your risk profile and therefore how much a policy will cost you.

You will typically choose the amount of coverage you want, and for how long you would like to have benefits for, when you need to use them.

A long term care insurance policy typically has a daily amount it will cover for care services, and also a lifetime amount it will cover.

Once you’re approved for coverage and the policy is issued, you begin paying premiums. The premiums may typically be paid monthly, every quarter, every 6 months, or yearly. This is something that you should talk to your long term care insurance specialist about, since having some payment flexibility might help some people better afford the policy.

Under most long-term care policies, you’re eligible to use your benefits when you can’t do at least two out of six “activities of daily living,” called ADLs, on your own or you suffer from dementia or other cognitive impairment.

List of Activities of Daily Living (ADLs)

Bathing

Eating

Getting dressed

Toileting (getting on or off the toilet)

Caring for Incontinence

Transferring (getting in or out of a bed or a chair)

Is it Worth the Cost?

Long-term care costs are typically very expensive, and can drain many people’s retirement savings very quickly. According to the Genworth 2020 Cost of Care Survey, the median costs of care in a nursing home with a semi-private room is $93,072 per year. For the average man who needs care services for 2.2 years, that would require around $200,000 to pay for out of pocket with their savings. If that man had purchased a long term care insurance policy at $1700 per year, at age 60, then if he needs long term care at age 70, he will have paid $17,000 in insurance premiums, and be able to access the benefits that he has, which could be in the ballpark of $200,000. So he will have saved $183,000 and still be getting access to all $200,000 of benefits, while retaining his savings.

Cost Graph

Genworth 2020 Cost of Care survey. Median cost of a private nursing home in the US.

Things to Consider Before Purchasing

  • Age and health play a role in long term care insurance costs. Generally, the higher your age, the more expensive a policy which is why many people typically purchase a policy in their mid-50’s.
  • Long term care costs vary by where you live, so think about where you plan to live when you’re older and use that to inform how much long term care coverage you’ll need. Refer to Genworth’s 2020 Cost of Care Survey for more information on costs by region.
  • Not all LTC policies cover Allzheimer’s so make sure this is something you ask your agent.
  • Check if your policy has a non-cancellable clause. If not, an insurer may be able to cancel the policy at their discretion.

By the numbers, according to the 2020 Cost of Care survey sponsored by Genworth Financial

$105,850

Median cost of a private room in a nursing faclity in the U.S.

$51,600

Median cost of a private room in an assisted living facility in the U.S. 

$54,912

Median cost of a home health aid in the U.S.

Key Takeaways: 

  • Talk to your loved one’s before an ADL issue occurs
  • Decide where you will want to receive care (home or facility)
  • Think about what state you plan to be in when you’re older
  • Research projected costs 
  • Determine how you will pay for care
  • Talk to a licensed insurance agent

FAQ

I’ve heard that long-term care insurance is expensive. Is that true?

It can be expensive, but it depends on the type of policy you buy, the coverage you want, and when you buy it.

If you’re young and healthy, or if you don’t think you’ll need much long-term care for some other reason, you’ll probably pay a lot less for one of these policies than someone who is older, has health issues, or has a more likely need for long term care.

How will pre-existing conditions affect LTC benefits?

It can be expensive, but it depends on the type of policy you buy, the coverage you want, and when you buy it.

If you’re young and healthy, or if you don’t think you’ll need much long-term care for some other reason, you’ll probably pay a lot less for one of these policies than someone who is older, has health issues, or has a more likely need for long term care.

At what age should I buy long term care insurance?

It can be expensive, but it depends on the type of policy you buy, the coverage you want, and when you buy it.

If you’re young and healthy, or if you don’t think you’ll need much long-term care for some other reason, you’ll probably pay a lot less for one of these policies than someone who is older, has health issues, or has a more likely need for long term care.

What are the key factors that determine how much I’m going to pay?

It can be expensive, but it depends on the type of policy you buy, the coverage you want, and when you buy it.

If you’re young and healthy, or if you don’t think you’ll need much long-term care for some other reason, you’ll probably pay a lot less for one of these policies than someone who is older, has health issues, or has a more likely need for long term care.

Will my insurance premiums stay the same over time?

It can be expensive, but it depends on the type of policy you buy, the coverage you want, and when you buy it.

If you’re young and healthy, or if you don’t think you’ll need much long-term care for some other reason, you’ll probably pay a lot less for one of these policies than someone who is older, has health issues, or has a more likely need for long term care.

Are there ways I can save money on long term care policies?

It can be expensive, but it depends on the type of policy you buy, the coverage you want, and when you buy it.

If you’re young and healthy, or if you don’t think you’ll need much long-term care for some other reason, you’ll probably pay a lot less for one of these policies than someone who is older, has health issues, or has a more likely need for long term care.

Can I just use Medicare/Medicaid to cover my long term care costs instead?

It can be expensive, but it depends on the type of policy you buy, the coverage you want, and when you buy it.

If you’re young and healthy, or if you don’t think you’ll need much long-term care for some other reason, you’ll probably pay a lot less for one of these policies than someone who is older, has health issues, or has a more likely need for long term care.

What is a shared long term care policy?

It can be expensive, but it depends on the type of policy you buy, the coverage you want, and when you buy it.

If you’re young and healthy, or if you don’t think you’ll need much long-term care for some other reason, you’ll probably pay a lot less for one of these policies than someone who is older, has health issues, or has a more likely need for long term care.

What is a long term care insurance hybrid policy?

It can be expensive, but it depends on the type of policy you buy, the coverage you want, and when you buy it.

If you’re young and healthy, or if you don’t think you’ll need much long-term care for some other reason, you’ll probably pay a lot less for one of these policies than someone who is older, has health issues, or has a more likely need for long term care.

Can I use my life insurance to pay for long term care?

It can be expensive, but it depends on the type of policy you buy, the coverage you want, and when you buy it.

If you’re young and healthy, or if you don’t think you’ll need much long-term care for some other reason, you’ll probably pay a lot less for one of these policies than someone who is older, has health issues, or has a more likely need for long term care.