Medicare is very limited in its scope of coverage, covering only shorter stays in nursing homes and limited in-home care and regular health care plans also don’t cover long-term care. Assisted living and memory care facilities range in cost from $3,000 and $7,000 a month in Alabama. The cost of long-term care is unmanageable for most people without prior planning and long-term care insurance can help alleviate the financial burden later in life.
Coverage of Long-Term Care Insurance
You pay a monthly premium for long-term care insurance and reimbursement begins once you require care. Plans generally cover care given in an assisted living facility, a nursing home, or at home
When you apply for long-term care insurance, you can choose the amount of coverage you want. The factors of coverage include daily and lifetime coverage maximums, the length of the elimination period, cost-of-living adjustments, and restrictions on types of care covered.
Plans have a maximum dollar amount for each day and a total pool for coverage of care. Once the daily maximum is reached, the remaining cost of care will be your responsibility, and once the total plan’s pool is exhausted, all remaining care will have to be paid out of pocket.
Most plans will require you to pay all costs out-of-pocket for a certain period of time, called the elimination period, after being admitted to a long-term care facility or beginning at-home care. This period can range from 30 days to 90 days or more. After you have paid for the care during this period, your coverage will begin.
Plans can also include a cost-of-living adjustment that will increase the coverage cap to mitigate the effects of inflation. Plans will also have restrictions on what care is covered and having fewer restrictions will increase the premium of the plan.
Once you begin to receive care, you can file a claim to begin receiving benefits. Your medical documents will be reviewed by your insurance company and you may be evaluated by a nurse appointed by the company.
Coverage will typically kick in when you need assistance with a couple of the activities of daily living which include:
- Bathing
- Caring for incontinence
- Dressing
- Eating
- Toileting
- Getting in and out of bed
Costs
Your monthly premium will be determined by the plan’s coverage, length of the elimination period, and coverage caps as well as other factors. The older you are when you apply for coverage, the more expensive your plan will be. Women’s plans are generally more expensive than men’s because women typically live longer than men, increasing the cost to cover for the insurance company. Married people pay lower premiums than single people. Insurance companies will also vary in cost for the same coverage. Premiums can increase after you’ve purchased a plan if allowed by federal and state regulators.
Premiums for insurance are also tax-deductible if you reach a certain cost. The deduction increases as you age.
Choosing a Plan
When reviewing plans, keep in mind that different insurers vary widely in cost for the same coverage. Once you’ve decided the amount of coverage you’ll need, make sure to compare many different companies to make sure you get the best price. Your employer may also offer long-term care insurance at a discount, but make sure it’s not more expensive than other potential plans.