Today's LTC insurance product uniquely fills the needs of many of the 34 million Americans age 65 and over, plus many of their 76 million adult children -- the baby boomers, plus those younger folks who are concerned and want to take action now to preserve their assets, their next egg, and their insurability.

Today's LTC policies are vastly superior to earlier products which required a three day hospital stay to start benefits, had many gatekeepers, and covered only skilled nursing facility charges. While they were the best that could be offered at the time, increased underwriting and claims experience has made it possible for today's LTC products to offer options and benefits unheard of just a few years ago. They not only cover nursing home care, but also pay for care at home and in community settings such as assisted living facilities and adult day care centers.

Most policies will pay benefits because of a cognitive impairment such as Alzheimer's disease or because of inability to perform a specified number of activities of daily living. They cover all levels of service, including personal or custodial care. Home care and care in community settings are routinely included. Bed reservations, respite care and once-per-lifetime elimination periods are now standard features of many policies.

If You Are Married

Many of today’s policies are geared toward married couples by offering spousal discounts when both spouses apply and are covered at the same time.  Married couples can also choose a “Spouse Waiver of Premium  – which waives premiums for both spouses when one spouse is receiving benefits. There’s also a Survivorship Benefit which waives all future premiums for a surviving spouse providing both policies were in effect for a specified period of time.  Also available is a Shared Care Benefit, which allows one spouse whose benefits are used up to access benefits under the spouse’s policy.  And if one spouse is uninsurable, a Spouse Security Benefit will pay a cash benefit to the uninsured spouse when the insured spouse is receiving benefits under the policy.

LTC Policy Considerations

Listed below are some of the things you should consider in selecting a policy. They are not necessarily in priority order.

Type Of Care Paid For:

Unlike many government programs (like Medicare) today’s policies pay for all levels of care whether it is received at home, or in a licensed assisted living facility or nursing home.

Home Health
Look for a policy that will giving you a “helping hand” when home care is needed. Many policies include a Care Coordination benefit, which is available without an Elimination Period. Those using the Care Coordination Benefit can have access to Caregiver Training, Home Modification, Medical Alert System, Alternate Care and Durable Medical Equipment. The Care Coordinator can also assess a person’s needs and develop a plan of care.  And don’t forget to look for a policy that pays a cash benefit when care is provided by family and friends.

Adult Day Care
Many prefer to remain in the privacy of their home in the evening, but receive care in a group setting during the day. Look for a policy that allows this flexibility.

Facility Care
Care in an Assisted Living or Nursing Facility is generally covered, providing the facility is properly licensed.

Other Benefits
As time goes by, more and more innovative features and benefits are showing up in the marketplace. These include International Travel which pays benefits if you need care outside the U.S, Additional Benefits for Injury Under 65, Return of Premium if Insured dies prior to Age 65,  Respite Care to provide unpaid caregiver relief, and Bed Reservation which pays for a nursing home or assisted living facility room while you’re temporarily away.

Benefit Amount
How much will the policy pay for each day of care? Today’s policies offer a choice of benefit for nursing home care which can range from $50 to $500 a day. Since assisted living costs less than nursing home care, premium sensitivity is addressed by those policies offering a range of assisted living options, starting at 50% of the daily nursing home benefit. And since most prefer to receive care at home, look for a policy that offers cash benefits – even when care is provided by family and friends. When Professional Home Care Services are needed, some policies pay up to 300% of the nursing home benefit to meet the high cost of skilled home care.  

It’s a good idea to check the prevailing prices of home care and facility care in your geographic area before deciding on benefit amounts that will give you sufficient protection.

Benefit Period
How long will the policy pay? Newer policies offer benefit periods ranging from two to eight years – or for an unlimited period of time. How long a Benefit Period you choose may depend upon your age, assets at risk, or ability to pay premiums over a period of time.   Some policies offer an optional Restoration of Benefits provision which reinstates used policy benefits if care isn’t required for a period of time (generally 180 days).

Waiting (or Elimination) Period
How soon will your insurance pay once you require care? It can depend on where you receive care and the Elimination Period(s) you select. These can range from 0 to 365 days. Because care generally starts at the home, some carriers allow applicants to choose 0 days for home care and a longer elimination period for care in a facility.

Inflation Protection
Also available are inflation adjustment options (sometimes called Benefit Increase Options) that automatically increase policy benefits each year.  Increases are usually based on a specific percentage (chosen by the applicant at the time of application) and can extend over the life of the policy or for a specified period of time (10 or 20 years).  Lifetime increases can range from 2.5% to 5% Compound or 5% Simple.

Premiums and Rate Guarantees
In general, premiums are based on your age at the time of application. The younger you are when you apply, the lower your premiums will always be. It’s also best to apply for long-term care insurance while you’re in good health. If you wait, you may become uninsurable.  Premiums can only be changed on a “group basis” when approved by your state’s Department of Insurance.  Individuals cannot be singled out for a rate increase…regardless of their claims history.

Some policies do include a Five-Year Rate Guarantee, which can be extended up to ten years. Those selecting to pay premiums over ten years can, therefore, have a lifetime rate guarantee.

Preexisting Conditions
People who are sick may try to buy coverage. Obviously, this is not good for the insurance company or its policyholders. Companies can "look back" to see if there is a health history. When people have a preexisting condition and disclose it on the application, some companies may issue the coverage if the condition occurred some time ago or it is not considered serious.  In this case, the condition will be covered. Other companies may decline to issue the policy.

Mental and Nervous Conditions
Some policies exclude these conditions if there is no demonstrable organic cause (a deficiency in the normal functioning of the body - for example, depression).  Most companies have now modified their exclusion to cover such conditions as Alzheimer's Disease and senile dementia when a physician has diagnosed them as having a demonstrable organic cause.

Do Your Homework Before You Buy!
Look to a licensed agent for the assistance you need or contact GoldenCare USA, American’s Home for Long-Term Care Insurance at 1-800-842-7799.

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