Long-term care is a range of services and supports you may need to meet your personal care needs. Most long-term care is not medical care, but rather assistance with the basic personal tasks of everyday life, sometimes called Activities of Daily Living (ADLs), such as bathing, dressing. using the toilet, transferring (to or from bed or chair), caring for incontinence and eating.
Other common long-term care services and supports are assistance with everyday tasks, sometimes called Instrumental Activities of Daily Living (IADLs) including housework, managing money, taking medication, preparing and cleaning up after meals, shopping for groceries or clothes, using the telephone or other communication devices, caring for pets and responding to emergency alerts.
70% of people turning age 65 can expect to use some form of long-term care during their lives.1 There are a number of factors that affect the possibility that you will need care:
- Age: the older you are, the more likely you will need long-term care.
- Gender: women outlive men by about five years on average, so they are more likely to need long-term care as they age
- Disability: having an accident or chronic illness that causes a disability is another reason for needing long-term care.
- Health Status: Chronic conditions such as diabetes and high blood pressure make you more likely to need care. Your family history such as whether your parents or grandparents had chronic conditions, may increase your likelihood. Poor diet and exercise habits increase your chances of needing long-term care.
- Living Arrangements: If you live alone, you’re more likely to need paid care than if you’re married, or single and living with a partner.
The duration and level of long-term care will vary from person to person and often change over time. Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and supports in their remaining years. Women typically need care longer (3.7 years on average) than men (2.2 years on average). 2
Long-term care services and support typically come from unpaid caregivers who may be a family member or friend, as well as a nurse, home health or home care aide or therapist who comes to the home, adult day services in the area and a variety of long-term care facilities.
Most long-term care is provided at home. Other kinds of long-term care services and supports are provided by community service organizations and in long-term care facilities.
Examples of home care services include unpaid caregivers who may be family members or friends as well as nurses, home health or home care aides and therapists who come to the home
Community support services include adult day care service centers, transportation services and home care agencies that provide services on a daily basis or as needed. Often these services supplement the care you receive at home or provide time off for your family caregivers.
Outside the home, a variety of facility-based programs, including nursing homes provide the most comprehensive range of services, including nursing care and 24-hour supervision. Other facility-based choices include assisted living, board and care homes, and continuing care retirement communities.
Most consumers want to remain in their homes for as long as possible and delay facility care as long as they can.
The facts may surprise you. Consumer surveys reveal common misunderstandings about which public programs pay for long-term care services. It is important to clearly understand what is and isn’t covered.
What does your Health Insurance pay for long-term care?
Most employer-sponsored or private health insurance, including health insurance plans, cover only the same kinds of limited services as Medicare. If they do cover long-term care, it is typically only for skilled, short-term, medically necessary care.
What does your Disability Insurance pay for long-term care?
Disability insurance is intended to replace some of a working person’s income when a disability prevents them from working. It does not cover medical care or long-term care services.
What does your Medicare pay for long-term care?
Medicare only pays for long-term care if you require skilled services or rehabilitative care in a nursing home for a maximum of 100 days or at home if you are also receiving skilled home health or other skilled in-home services. Generally, long-term care services are provided only for a short period of time and does not pay for non-skilled assistance with Activities of Daily Living (ADL), which make up the majority of long-term care services
Medicare Supplemental Insurance, also known as “Medigap,” are private policies designed to fill in some of the gaps in Medicare coverage. Specifically, these policies help to cover Medicare copayments and deductibles to enhance your hospital and doctor coverage, but does not extend to long-term care coverage.
What does your Medicaid pay for long-term care?
Medicaid pays the largest share of long-term care services, but to qualify, your income must be below a certain level and you must meet minimum state eligibility requirements. Medicaid is a joint federal and state government program that helps people with low income and assets pay for some or all of their health care bills.
Medicaid covers medical care, like doctor visits and hospital costs, long-term care services in nursing homes, and long-term care services provided at home, such as visiting nurses and assistance with personal care. Unlike Medicare, Medicaid does pay for custodial care in nursing homes and at home.
You must meet certain requirements to be eligible for Medicaid, including having income and assets that do not exceed the levels used by your state. The amount of income you can have varies by state, and also varies depending on which eligibility groups each state covers.
While Medicaid’s assessment of your income is relatively straightforward, the assessment of your assets can be fairly complex. When determining eligibility for Medicaid your home, regardless of its value, is exempt from being counted as a resource as long as it is your principal place of residence. But, your home can affect whether Medicaid will pay for your long-term care services, including nursing home care and home and community-based services.
What does your Veterans Affairs (VA) pay for long-term care?
The Department of Veterans Affairs (VA) pays for long-term care services for service-related disabilities and for certain other eligible veterans, as well as other health programs such as nursing home care and at-home care for aging veterans with long-term care needs. The VA also pays for veterans who do not have service-related disabilities, but who are unable to pay for the cost of necessary care. Co-pays may apply depending on the veteran’s income level.
Unlike traditional health insurance, long-term care insurance is designed to cover long-term services and supports, including personal and custodial care in a variety of settings such as your home, community or other facility.
Individual Long-Term Care Insurance Plans
Long-term care insurance policies generally pay benefits in one of two ways: either by reimbursing policyholders up to a daily amount (up to a pre-selected limit) for long-term care services, or by paying a set dollar amount per day up to the policy limit, regardless of the actual cost of services. You can select a range of care options and benefits that allow you to get the services you need, where you need them.
Most policies available today cover the cost of long term care services delivered in a broad range of settings, including your home, adult day service centers, hospice care, respite care, assisted living facilities (also called residential care facilities or alternate care facilities), memory care, Alzheimer’s special care facilities and nursing homes.
In the home setting, polices often cover skilled nursing care, occupational, speech, physical and rehabilitation therapy as well as help with personal care, such as bathing and dressing.i
The cost of your long-term care policy is based on how old you are when you buy the policy, the maximum amount that a policy will pay per day and the maximum number of days (years) that a policy will pay. The maximum amount per day times the number of days determines the lifetime maximum amount the policy will pay, plus any optional benefits that increase with inflation.
If you are in poor health or already receiving long-term care services, you may not qualify for long-term care insurance as most individual policies require medical underwriting. In some cases, you may be able to buy a limited amount of coverage, or coverage at a higher “non-standard” rate.
In order to receive benefits from your long-term care insurance policy you meet two criteria - the Benefit Trigger and the Elimination Period.
Benefit triggers are the criteria that an insurance company will use to determine if you are eligible for benefits. Most companies use a specific assessment form that will be filled out by a nurse/social worker team. Most policies pay benefits when you need help with two or more of six ADLs or when you have a cognitive impairment. Once you have been assessed, your care manager from the insurance company will approve a Plan of Care that outlines the benefits for which you are eligible.
The “elimination period” is the amount of time that must pass after a benefit trigger occurs but before you start receiving payment for services. An elimination period is like the deductible you have on car insurance, except it is measured in time rather than by dollar amount. Most policies allow you to choose an elimination period of 30, 60, or 90 days at the time you purchased your policy. During the period, you must cover the cost of any services you receive. Some policies specify that in order to satisfy an elimination period, you must receive paid care or pay for services during that time.
State Long-Term Care Insurance Partnership Plans
Residents of some states may be able to find long-term care coverage through a State Partnership Program that links special Partnership-qualified (PQ) long-term policies provided by private insurance companies with Medicaid. These Partnership-qualified policies:
- Help people purchase shorter term, more complete long-term care insurance
- Include inflation protection, so the dollar amount of benefits you receive can be higher than the amount of insurance coverage you purchased
- Allow you to apply for Medicaid under modified eligibility rules if you continue to need long-term care and your policy maximum is reached, including a special “asset disregard” feature that allows you to keep assets like personal savings above the usual $2,000 Medicaid limit.
If you have a Partnership-qualified long-term care insurance policy and receive $100,000 in benefits from it, you can apply for Medicaid and, if eligible, retain $100,000 worth of assets over and above the state’s Medicaid asset threshold. In most states the asset limit is $2,000 for a single person, although asset limits for married couples are often higher.
“Hybrid” Approaches to Long-Term Care
During the past decade, alternative approaches to paying for long-term care expenses have emerged. These approaches include life insurance with long-term care riders and annuities with long-term care riders. Long term care benefits through life insurance are incorporated into the policy through a rider which allows the policyholder to tap the death benefit to use for long term care. What’s left of the benefit will be awarded to the beneficiaries after death.
As it relates to annuities with long-term care riders, the accelerated benefits associated with long-term care benefit payments are accompanied by concurrent reductions from annuity account value with no surrender charges, plus an independent benefit not supported by account value reductions.
Employer Long-Term Care Insurance Plans
Many private and public employers, including the federal government and a growing number of state governments, offer group long-term care programs as a voluntary benefit, and generally:
- Employers do not typically contribute to the premium cost (as they do with health insurance), but they often negotiate a favorable group rate
- If you are currently employed, it may be easier to qualify for long-term care insurance through your employer than it is to purchase a policy on your own
- You should check with your benefit or pensions office to see if your employer offers long-term care insurance.
If you have a long-term care insurance policy, the buyer pays a pre-set premium. The policy then pays for the services you need, when you need them (subject to the policy terms, up to its coverage limits). On occasion, if the assumptions used to price the policy prove wrong, the insurance company can increase your premiums beyond the pre-set amount, but only on all policies in the same policy series and only within the state’s regulatory requirements. Typically, you are not expected to pay premiums while you receive long-term care.
Because premiums are based on your age and health, the younger you are, the lower your premiums. Premiums typically increase 8-10% each year a person waits to buy coverage. As we age, medical conditions may prevent us from being eligible for coverage.
When you purchase long-term care insurance, you are buying a pool of dollars from which you can pay your long-term care expenses. The pool of dollars for your care is based on your benefit period multiplied by your daily or monthly benefit amount. For example, a 3-year policy with a $150 dollar a day benefit equates to a $164,250 pool of money.
In this case you will have $164,250 available for reimbursement of your long-term care expenses. Your Pool of Money can be used to pay for things like In-Home Healthcare, Adult Day Care, Assisted Living, or a Nursing Home Facility. Your long-term care specialist will help you determine the benefit that is right for you. (Review the policy for details of coverage under the policy, exclusions and limitations, what you must do to keep your policy in-force and what would cause your policy to be discontinued.)
Disability coverage replaces lost income to maintain one's lifestyle and was not designed to pay for care. Long-term care insurance provides the funds to pay for your actual cost of care. Long-term disability terminates at age 65, long-term care insurance does not.