At Minute Women, every month or two we have a sign-on that has long-term care insurance.
Almost everytime, we end up going back and forth between the family and insurance provider to make sure we have the necessary paperwork and information to ensure our services are covered and that the family receives reimbursement for the services received.
Inevitably the family voices their frustration with the insurance company. How hard this is, too many hoops to jump through, etc.
So we decided to put together, seven thoughts on long-term care insurance you should consider if you are looking at buying a policy.
Let’s get into it.
Let’s start with the basics. Long-term care insurance is an insurance policy you pay into and if you need non-medical care or assisted living services, they can help with those costs by reimbursing you for them.
Check with your parents to see if the purchased a long-term care insurance policy.
We have seen families pay a lot of money out of pocket for care only to find out they did have an LTC insurance, but it was too late to get reimbursed for a variety of reasons.
Cost typically ranges between $3,000 – $6,000 annually. The cost is dependent on a number of factors including sex, age, health, max health benefits and the length of the waiting period.
Additionally, know that this is not a fixed cost. Like health insurance, the cost does go up each year – between 3%-5%.
When To Buy
Financial advisors suggest purchasing long-term care insurance in your early 50’s.
The reason for this is you are still in good health and can have a lower monthly cost.
But remember the early you purchase the policy, the longer you must pay it before your health deteriorates to the point that you need it.
You must weight the options on waiting longer and having a higher monthly payment, or purchasing sooner for a lower monthly premium but over a longer period of time.
How Much It Helps
For the majority of folks who receive long-term care insurance benefits, it only helps supplement the cost of care. The majority of clients we provide care to need more care than the policy will cover.
Private home care services and assisted living communities cost thousands of dollars per month, so it is likely that your policy will only help pay for the services, but won’t cover all of them,
One item to consider is to save on your own and self-insure.
Like LTCi, we pay into social security each month in hopes to have that as income when we are older and retired, but if you pass away before you can receive the benefit, you lose it all.
The same goes for long-term care insurance. There is no guarantee you will need it or ever use the coverage. If that end’s up being the case, you have wasted a lot of money.
So think about saving on your own. Speak with your financial advisor to see what alternative options there are. This way if you do pass away early, your family gets your money, not an insurance company.
Understand your policy details. They can range widely. In our experience, there is no standard policy.
We have even seen policies that do not provide coverage for dementia. This policy apparently did not consider dementia a reason to need home care services.
Know what your policy does and does not cover – when you need reimbursement you will be happy to know what it covers and what it does not cover.
Somewhat in the same vein as the previous thought, know what documentation you need to have to get reimbursed for services.
Knowing this upfront will save you a lot of headaches when working with not only the long-term care insurance company, but with the private agency as well.
Letting the private agency know upfront what you need from them to get reimbursed will allow you to vet who you can work with and who you can not. Some agencies might not be able to provide the documentation you need.
For example, we have a client who didn’t know that her father had long-term care insurance until after she was using us for months. After she learned about her father’s policy the insurance company asked for documentation we didn’t have.
It was something we could easily do, but since we were unaware this special documentation was needed, there wasn’t much we could do.
Once we knew what was needed, we worked with the LTCi company to determine what was acceptable documentation and we made the changes.
So know what documentation you need and let the private agency know what you need before you start services.
Wrapping It Up
So there are seven thoughts we have about long-term care insurance. I am sure there are many more ideas, concerns, thoughts, and questions out there when it comes to LTCi.
This is just a start and we would love to have feedback from you. So let us know your thoughts below.