Planning for long term care is crucial. There’s not a “one size fits all” solution for each person or family, but a plan should be put in place ahead of time in order to protect your family, income, and assets. Planning ahead instead of crisis planning reduces stress and the disruption of your retirement plan.

Long-term care insurance is an important piece to consider in the planning process. It can provide great savings and support for the family.

What is long-term care insurance?

It is protection that provides a tax-free stream of income to help pay for care costs that are generally not covered by medical insurance, Medicare or Medicaid. Think of it as a bucket of money that you can use to pay for care.

What’s typically covered when you have long-term care insurance?

  • Custodial care aka unskilled care – Non-medical assistance with activities of daily living such as transferring, toileting, bathing, dressing, eating, and continence.
  • Skilled nursing care – High level of medical care that must be provided by or under the direct supervision of licensed health professionals. They help with things like complex meds, respirator, catheter care, iv therapy, etc.
  • Therapy care – Physical, occupational, speech, etc.
  • Instrumental Activities of Daily Living – Day-to-day tasks that allow someone to live independently but are not considered necessary for daily functioning like managing bills, hygiene, shopping for food and clothing, laundry, and light housekeeping.
  • Stay at home benefits – Many policies pay for caregiver training so that your primary caregiver knows how to properly assist you or use a medical device. Home modifications and supportive equipment is also typically included too.
  • Respite care – Many policies also provide respite care which is short-term relief for an informal caregiver so they can take a break from the responsibilities of providing care.
  • Bed Reservation – Policies will also typically allow you to “hold your spot” for a specified number of days in a facility each year. This is important if you need to go to the hospital or if you stay with a family member for a bit of time.
  • International benefits – Some policies also allow you to receive benefits outside of the U.S. and Canada.

Where can you receive care with insurance?

Most plans today are comprehensive and allow you to receive care in a variety of settings including your home, adult day care, assisted living, nursing homes, hospice, special care facilities, adult family homes, and continuing care retirement communities.

Why is it a good idea to have insurance for long-term care?

There are many reasons, but the main ones are to protect you and your family from the financial, physical and emotional burdens of a long term care situation. It gives you the ability to stay in control of your care options, provides professional services like care coordination, case managers and claims specialists. It reduces tax consequences so you don’t have to convert your assets to income, and it also provides asset protection so that all of your other funds aren’t at risk.

When is the best time to put an insurance plan in place?

When you’re healthy and younger. You’ll have more options and it will be less expensive when you are healthier and younger.

How much is it?

This is like asking how much does a car cost. It depends on many factors like your age, health, marital status, type of plan, monthly benefit, benefit period, etc. After we review your health information and have a conversation about your personal situation, we can give you quotes. The goal is to create a policy that is meaningful and affordable for YOU and that’s going to look different for each person.

How can you pay for an insurance plan?

There are many ways to fund a plan depending upon the type of plan, but you can use things like your income, savings, HSA, retirement accounts like a 401k or IRA, and cash value that you have in a permanent life insurance policy.

The Bottom Line

Long-term care insurance protects your finances and family. We hope this answered a few of your basic questions.