Healthy aging can be a complex process, but having a firm foundation based on advanced planning makes things easier. Providing for future care needs, outside of savings or similar resources, gives peace of mind for both seniors and their loved ones. A forward-thinking plan also helps protect assets and savings while promoting dignity and independence throughout aging.
One of the best ways to plan for the future is by taking out a long-term care insurance (LTCI) policy. These policies can help pay for many different types of care, but many seniors and their families aren’t sure what LTCI is or how it works. This knowledge gap is becoming more and more of an issue, as now over half of American adults over the age of 65 will need long-term care during their lives. This care looks different for everyone, ranging from in-home support to nursing home stays and plenty of options in between, but it may not be fully covered by programs like Medicare. Long-term care insurance fills in the gaps, covering services and care that would otherwise be out-of-pocket expenses.
VOANS is dedicated to partnering with seniors and their loved ones to plan for proactive, compassionate solutions for aging well, including understanding how solutions like long-term care insurance function and the types of care they can cover. Read the rest of our guide to learn more.
What Is Long-Term Care Insurance and How Does It Work?
Long-term care insurance is an insurance policy that can help pay for care services to support individuals when they can no longer perform multiple everyday tasks on their own. LTCI policies are most useful when purchased by people in their 50s or 60s in preparation for future care needs. Once you have a claim, the benefits are generally triggered by specific health conditions — such as when you need help with two or more activities of daily living (ADLs). Once triggered, these benefits are processed like most other insurance policies, with a submission of care documentation and either direct coverage for eligible expenses up to a policy limit or a fixed monthly cash benefit for flexible use.
What Long-Term Care Insurance Covers (and What It Doesn’t)
Regardless of the specific payment model, LTCI benefits can be used for various care needs, including:
- Assisted living
- Home health aides
- In-home personal care
- Memory care services
- Residential care community living
- Respite or hospice care
- Skilled nursing services and long-term care communities
However, not all health conditions or services are covered by long-term care insurance — pre-existing conditions can limit eligibility or advanced cognitive decline during application can be disqualifying. LTCI policies also often have waiting periods before benefits can begin, which makes planning ahead even more important.
Types of Long-Term Care Insurance Plans
There are three general types of LTCI policies, traditional, hybrid, and life insurance with a long-term care rider. All three are viable options depending on individual needs, but choosing the right one is important in order to get the most out of your coverage.
Traditional Long-Term Care Insurance
This coverage only covers long-term care, whether that be at home or in some kind of assisted living community. Traditional policies cover approved costs up to a daily or monthly amount, with a benefit period that is variable depending on your plan. Some have benefit periods that cover a few years or up to a lifetime, and the premium amount will increase the longer the benefit period. Traditional benefits also usually have a waiting 30 – 90 waiting period before plans can take effect.
These plans do not offer life insurance and are “use it or lose it” types of plans. This means that if you never need to use your benefits, you or your family do not get any of your money back. These are generally the least expensive LTCI options, since they don’t include anything but care benefits.
Hybrid Long-Term Care Insurance
A hybrid plan combines traditional LTCI benefits with a life insurance plan. These plans cover both in-home or assisted living care costs, just like traditional LTCI, but also include a life insurance policy with a death benefit. While these plans often cost more than traditional long-term care insurance, they do provide guaranteed value with predictable premiums and plenty of flexibility. Hybrid LTCI plans have become increasingly popular in recent years.
Additional Long-Term Care Insurance Options
Some employers offer the benefit of purchasing LTCI at a discounted group rate. There are also short-term care plan options available through some carriers, but the most popular additional LTCI solution is as a rider for a life insurance policy. If your life insurance policy allows you to add coverage for long-term care via a rider, you will be able to use some of the death benefit as a way to pay for long-term care.
When to Buy Long-Term Care Insurance and What It Costs
Like so many health care decisions, the right time to purchase LTCI is unique to each individual. In general, the most cost- and benefit-effective window to buy a policy ranges from mid-50s to early 60s. This is the sweet spot to ensure you have coverage before health issues drive costs up.
There are many variables that go into the cost of long-term care insurance, including:
- Age
- Benefit amount and period
- Coverage level
- Elimination period
- Gender
- Health
- Inflation protection
- Policy type
By making smart, long-term decisions early, LTCI buyers can take advantage of the best rates possible, ultimately saving money.
Planning With VOANS
Long-term care insurance is a long-term investment in more than protection for your assets and savings account. LTCI can help ensure you have the freedom and dignity to live however you wish as you age. VOANS holds these values dearly and make it our mission to ensure all of our residents can age with dignity and support how they wish to live every day. Our holistic approach to aging includes discussing options for long-term care, ensuring our residents and their families have confidence and peace of mind about being part of our community.
If you have questions about planning or details about how we handle long-term care insurance coverage, contact our team. We’d be happy to provide all the answers we can. If you or a loved one is interested in becoming a member of any of our communities, reach out to us to schedule a tour! Our warm and welcoming community of staff and residents would love to meet you.
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