How Long-Term Care Insurance Works

long term care insurance

How Long-Term Care Insurance Works

The general consensus, especially among young people, is that long-term care insurance isn’t so important. We could trace the reason for this belief to the fact that young people are usually agile and full of energy.

As a youth, it can be hard to imagine that at old age, you’ll need some assistance taking care of yourself. But this almost always turns out to be the case. The million-dollar question is: will you be able to afford care at that critical stage of your life? How will you prepare for this seemingly inevitable circumstance? Ponder on these questions for a second.

Long-term care insurance is an answer. It’s one of the ways to prepare for what’s coming.

What Exactly Is Long-Term Care Insurance?

First and foremost, let’s define long-term care. Simply put, long-term care is a number of services that you pay for separately, outside your regular health insurance plans. These include nanny-related activities like bathing, taking a walk, dressing, and some other daily chores. 

Long-term care insurance is a policy that covers the costs of these services. Therefore, when you enroll in a long-term care insurance plan, you don’t have to pay out-of-pocket when you require these services.

Take a moment to picture old individuals who are suffering from mental illnesses, arthritis, and other disorders. They surely need assistance, right? Long-term care insurance takes care of this.

Purchasing a long-term care insurance policy can be a great investment when you’re old. Guess what? Delay can cost you this opportunity. Having any of these conditions will disqualify you from long-term care insurance if you didn’t purchase one beforehand. 

How Does Long-Term Care Insurance Work?

All you have to do is fill out a form to answer questions about your health. Some insurers may request to see documents like your medical records. You may also be interviewed virtually or in person. 

Typically, different plans cover different services, so you get to choose the amount of coverage you want. In most cases, there’s a cap on the amount you can pay during your lifetime. Submit the application to the insurer and wait for the approval. Once the insurer approves you for coverage, you’ll be required to pay premiums. 

When you need care in the future, the insurer may need to evaluate your health status by sending a nurse to do some checks, and may also need to go through your medical records from a certified doctor. Upon successful evaluation, the insurer can approve your claim. However, this can only be done after your care plan has been approved.

What Are the Activities of Daily Living (ADL)?

Typically, there are six ADLs and they include:

  1. Dressing
  2. Eating
  3. Bathing
  4. Getting out of bed or moving from one room to another
  5. Using the restroom
  6. Other sanitary activities, like caring for incontinence, cleaning of nails, etc

What the Statistics Say

  1. According to a 2020 report from the Department of Health and Human Services, about 70% of individuals, aged 65 and above need long-term care assistance. 
  2. Men require care for a lesser average timespan (2.2 years) than women (3.7 years)
  3. Most people purchase a long-term care insurance policy in their early 50s and 60s, but the truth is that you don’t have to wait until then. The right time to purchase a long-term care plan is now, regardless of whether you’re below or past the age of 50.

Does Medicare Cover Long-Term Care?

The answer is no! Just like regular health care insurance, Medicare does not cover long-term care. The only services your Medicare plan will cover are limited home health care and brief nursing home stays, provided you require expert nursing and rehabilitation services only. But day-to-day routine assistance and home care will not be catered for.

This means that you’ll have to pay out-of-pocket when you need these services. In most states, Medicaid can come through for you, but only when you meet certain criteria.

Why Should People Purchase Long-term Care?

Generally, there are two main reasons why you should enroll in a long-term care insurance plan:

  • To Keep Savings Intact

Here’s one key fact: a lot of people are just one illness away from going broke. The cost of care can be ‘bank-breaking’, for lack of a better word. For example, a survey showed that renting a semi-private nursing home room can cost you over $90,000 per annum. Just wow!

  • Quality of Care

Everybody wants quality care. Purchasing a long-term care insurance plan can give you more choices for quality care, much more than Medicaid can offer you. The reason is that, when you depend solely on Medicaid, it limits your choice of care to nursing facilities that accept Medicaid payments. And yes, if you live in some states, like Alabama and Pennsylvania, enrolling for Medicaid won’t cover costs for assisted living.

Is Long-term Care Affordable?

Sadly, this is where many people get stuck. Long-term care may not be affordable for low-income families and individuals with little savings. However, there are factors that determine the rate you pay:

  • Insurer

The price may vary among insurers. It’s smart to compare different options

  • Age and Current Health Status

Your rate will depend on your age and how many health problems you have. When you apply for a policy, the insurer will review your medical records and will do some evaluations. Old age and more health problems equal a higher rate.

  • Marital status

Singles pay more than married individuals. Some insurers offer shared care options that allow couples to enjoy each other’s coverage benefits when they both buy insurance policies. The husband can purchase a policy that covers three activities of daily living, while the wife can purchase a policy that covers the other three. This can help to cut costs.

  • Amount of Coverage

Of course, more coverage equals more money. 

  • Gender

Going by the statistics, women have a higher life expectancy than men and stand a greater chance of needing long-term care. As a result, they tend to pay more.

How Much Should You Spend on Long-Term Insurance?

Going by experts’ advice, you are to spend 5% or less of your total income on a long-term care insurance plan.


Long-term care can save you a whole lot; your money and most importantly, your health. It’s therefore wise to purchase a policy while you’re still healthy.

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