Long Term Care Insurance: FAQ's Answered

What is LTCi?
LTCi is the acronym for Long-term Care Insurance. It is a type of insurance that pays the bill if you need extended care such as care in a nursing home, your own home, or in an assisted living facility.
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Who needs LTCi?
According to many government and health organizations, all middle income people should make LTCi a part of their long range planning. This is because of the increasing costs of such care, and the shrinking Medicaid budget which people at one time counted on to pay those bills.

Does LTCi pay the entire nursing home bill?
That depends on your daily benefit. When you purchase LTCi, you choose a daily benefit which is a dollar amount ranging from $50.00 to $400.00. If you choose an inflation rider, your benefit will increase by a certain percentage each year. However, if your benefit is not enough to pay the entire bill, you will have to pay the remainder out of your pocket. Additionally, you will have to pay a deductible which is typically a certain number of days when you first go on care.

I thought Medicare was senior health insurance. Why do I need LTCi?
Medicare pays for the first 100 days (with a co-pay for 80 of those days) if you have been in the hospital for three days first and need skilled care. After 100 days, Medicare stops. Medicare does not pay for custodial or intermediate care at all.

If I don't have the money, can't I just assume Medicaid will pay the bill?
NO! The government has changed the rules making it difficult to qualify for Medicaid. Furthermore, if the state does have to pay your bill, you can count on turning over all of your assets to the nursing home up to whatever is needed to repay the state. Medicaid is not free. If you have to use it, your children will be asked to pay it back.

Is LTCi expensive?
That depends on what you call expensive. It is generally more affordable than buying private health insurance, and pays much more. Even for a couple in their mid to late 70s, the premium for the entire year is likely to be slightly less than the cost of just one month in the nursing home. For people in their mid 50s, you could pay a LTCi premium for 10 years and still spend less than you would for one year in the nursing home.

I'm in good health. Why should I put money into something I don't need?
It's like car insurance or any other kind of insurance. You can't expect to wait until after you have a problem and then purchase the insurance. The only way you can get it is if you purchase it while you are still medically eligible.

What if I never use it? Will all that money just be lost?
What if your house never burns down? Will you get your fire insurance back? It is possible to purchase a return of premium rider that will return unused premium to beneficiaries. However, it makes your policy much more expensive. Also, if you have some money you don't need to spend, you can now purchase a single premium who life insurance with a LTC rider. If you need LTC, the value of the policy is used to pay the bill. If you never need the care, you beneficiaries receive the payout of the life insurance when you die.

Who will pay the bill if I outlive my LTCi policy?
If you outlive your benefit, the remainder of your bill becomes your responsibility. That is why you should engage the services of an estate planner to help you protect your assets.

How do I know which company is the best?
The language of the policies is confusing and companies do not use the same terms for various features. You should use a reputable agent to explain the policy itself. But before choosing your agent, look for a company that has been around for a long time and specializes in senior products. You may want to stay away from a company that offers everything from child life to auto insurance. Usually companies or agencies that boast every possible insurance product you could need actually have specific polices underwritten by the company that specializes in that line. For example, a company that is primarily auto and home insurance can get health and LTCi for you, but the health products will be underwritten by a health insurance company. As a result you may have difficulty in working with a real person if you ever need care. Stay with a company that has an independent product line and a reputation for paying promptly.
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