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Long Term Care Insurance FAQs

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What is LTCi?
Due to an awakening concern about the need for funds to pay for anticipated extended care, many folks are searching for information on “Long Term Health Care Insurance.” Unfortunately, the search itself indicates a lack of understanding in Long Term Care Insurance. Long Term Care Insurance is in the health insurance category, but is not major medical. It is care for a person who is no longer able to care for him or herself, either because of physical impairment or due to the onset of a cognitive disease. It does not pay a hospital or doctor; instead it pays for the cost of a person’s stay in a nursing home or for personal aids to come into a private home or assisted living facility to provide assistance where needed.

Who needs LTCi?
Nearly everyone except the very poor should purchase Long Term Care Insurance. Those who are very wealthy may not need the insurance to pay the bill, but if you have money, why no use a portion of it to purchase insurance and keep your life’s savings for yourself and your family. Those who are very poor will qualify for Medicaid to pay a nursing home bill and thus will not need LTCi. However, those in the middle class, who saved a modest retirement and have some assets, are the ones who stand to lose the most if they ever need care.

How much does LTCi pay?
When you purchase LTCi you will have to decide on your daily benefit which can be anything from $50.00 a day to $400. The government also recommends that you purchase an inflation rider with compounded interest so the daily benefit will keep up with inflation.

Does Medicare pay for LTC expenses?
In a word, no. Medicare pays for a small amount of nursing home care, specifically 20 days of full coverage and 80 more days with a copay. You must have been in the hospital for three days prior to admission to the nursing home, and only skilled care is covered. Custodial and intermediate care are not covered.

Why don’t I want to just rely on Medicaid?
Medicaid will pay the bill for those who are qualified—basically meaning those who have no assets and only a limited income. However, Medicaid planning involves spending down your assets until you have about $2000 left. Recently many states have ratified the partnership bill which actually allows one to qualify for Medicaid—if necessary—while protecting all or a portion of the assets.

Is LTCi expensive?
LTCi can seem expensive if you wait until your 60s or 70s to purchase it as a modest plan can easily be around $300 a month at that age. However, even at that, it is less than half of what it would cost to be admitted to a nursing home. If compared to the return, it is a very good bargain regardless of your age. The consideration thus needs to be whether you have the disposable income to be able to make the premiums. If you have the assets in an IRA or some other retirement fund, a good agent can show you how to set things up so your RMD goes to pay your long term care premium, thereby putting your social security or pension income back in your pocket.  

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