We occasionally provide senior care for families that use long-term care insurance. Here’s how it typically plays out.

Almost every time, we go back and forth between the family and their insurance provider. We make sure we have the necessary paperwork to ensure our services are part of their coverage. That way, your family receives the proper reimbursement.

And every time, we see families voice their frustration with their insurance company. How hard it is to navigate, how many hoops they have to jump through to arrange coverage, so on.

We decided to put together seven facts about long-term care insurance that you need to know before buying a policy.

What will learn in this article:

  1. Long-term can insurance is an insurance policy
  2. Average cost per year for long-term care insurance
  3. When you should buy long-term care insurance
  4. What costs are covered
  5. If you need insurance or not
  6. How plans can vary in coverage
  7. How you can be reimbursed under certain plans

Let’s get into it.

1) Long-term care insurance is an insurance policy.

Let’s start with the basics. Long-term care insurance is an insurance policy you pay into, and if you need non-medical care or assisted living services, they can help with those costs by reimbursing you for them.

Check with your parents to see if they purchased a long-term care insurance policy.

We have seen families pay a lot of money out-of-pocket for care only to find out they did have LTCI, but it was too late to get reimbursed for various reasons.

2) Long-term care insurance costs an average of $4,500 per year.

The cost typically ranges between $3,000 – $6,000 annually. The cost is dependent on several factors, including sex, age, health, max health benefits, and the length of the waiting period.

Additionally, know that this is not a fixed cost. Like health insurance, the cost does go up each year. LTCI experiences inflation between 3%-5%.

3) You should buy long-term care insurance before you turn 60.

Financial advisers suggest purchasing long-term care insurance in your early 50s.

The reason for this is you are still in good health and can have a lower monthly cost.

But remember, the early you purchase the policy, the longer you must pay it before your health deteriorates to the point that you need it.

You must weigh the options of waiting longer and having a higher monthly payment or purchasing sooner for a lower monthly premium but over a longer period.

4) Long-term care insurance often doesn’t cover the full cost of senior care.

For most folks who receive long-term care insurance benefits, it only helps supplement the cost of care. The majority of clients we provide care to need more care than the policy will cover.

Private home care services and assisted living communities cost thousands of dollars per month, so your policy will likely only help pay for part of the services.

5) If you have a lifetime savings account, you might not need long-term care insurance.

One item to consider is to save on your own and self-insure.

Like LTCI, we pay into Social Security each month to have that as income when we are older and retired, but if you pass away before you can receive the benefit, you lose it all.

The same goes for LTCI. There is no guarantee you will need it or ever use the coverage. If that ends up being the case, you have wasted a lot of money.

So think about saving on your own. Speak with your financial advisor to see what alternative options there are. This way, if you do pass away early, your family gets your money, not an insurance company.

6) Long-term care insurance policies vary in coverage.

Understand your policy details. They can range widely. In our experience, there is no standard policy.

We have even seen policies that do not provide coverage for dementia. This policy did not consider dementia a reason to need home care services.

Know what your policy does and does not cover – when you need reimbursement, you will be happy to know what it covers and what it does not cover.

7) Your insurance provider will need documents to reimburse you.

Somewhat in the same vein as the previous thought, know what documentation you need to have to get reimbursed for services.

Knowing this upfront will save you a lot of headaches when working with not only the long-term care insurance company but with the private agency as well.

Letting the private agency know upfront what you need from them to get reimbursed will allow you to vet who you can work with and who you can not. Some agencies might not be able to provide the documentation you need.

For example, we have a client who didn’t know that her father had long-term care insurance until after using us for months. After she learned about her father’s policy, the insurance company asked for documentation we didn’t have. 

Getting the documents was easy, but convincing the insurance company to reimburse the previous months of care was not. Advance documentation doesn’t do much if your provider isn’t aware of who needs it.

Once we knew what we needed, we worked with the insurance provider to determine acceptable documentation. Then we made the appropriate changes.

Above all, know what documentation you need. Then, let your home care agency know what you need before you start any hourly care services.

Contact Us to learn more about how Minute Women can help you plan for Long-Term Care Insurance needs!

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