10 Tips Involving Long-Term Care Insurance

Investigate long-term care coverage if you don’t want to rely on others to support you, and you want flexibility in choosing the type of long-term care services.
Long-term care insurance isn’t for everyone. If you are currently receiving Social Security or expect to have minimal or no retirement savings, you will likely qualify for state aid and should not purchase long-term care insurance.
Research individual insurance companies to see whether they have a history of raising rates for long-term care coverage.
Check with your financial advisor or accountant for guidance on whether long-term care insurance is appropriate for your specific financial situation. If long-term care insurance is for you, shop around for the most appropriate coverage at the best price.
Make sure you understand what a long-term care insurance policy covers and, just as importantly, what it doesn’t. Ask questions and make sure the company is reputable and licensed to sell insurance in your state. If you have concerns about a company, contact my Consumer Services Division at the number below.
Pre-existing conditions – health conditions that you have before you apply for the insurance coverage – may be excluded from coverage. In addition, for some policies, age 60 is a trigger for a rate increase. Thus, it may be beneficial to purchase your policy before your late 50’s.
Don’t rely on Medicare or Medicaid to cover your long-term care needs. Medicare will usually pay for a small percentage of nursing home costs. Medicaid pays for long-term care services but only if you meet federal poverty guidelines, and the choice of care facilities can be very limited.
Tax breaks are available for qualified long-term care insurance policy premiums. Also, the benefit payments received under such policies are tax-free.
Do not divulge personal financial or medical information over the phone, such as your social security number, health status, Medicare status or your private insurance coverage. Don’t be fooled by mailings about long-term care insurance that appear to be from an official government source.
Be wary of advertising that suggests Medicare is associated with a long-term care policy. Medicare does not endorse nor sell long-term care insurance.

Six Special Considerations: Make sure the following items are included in long-term care policies:

An “outline of coverage” that clearly describes the policy’s benefits, terms and limitations in detail. It is important to understand how much money the policy would pay, and how much the policyholder would be responsible for out-of-pocket.
A clear description of the elimination period. Some policies have a set number of days that must be spent in a nursing home or in claims status before the long-term care insurance coverage kicks in.
At least one year of nursing home or home healthcare coverage or both, including intermediate and custodial care.
The right to cancel the policy for any reason within 30 days of purchase and receive a full premium refund.
A guarantee that the policy cannot be canceled or terminated because of the policyholder’s age or physical or mental health condition.
Consider an inflation protection option that periodically increases the benefit level without the need for the policyholder to provide evidence of insurability.