Long Term Care Insurance

While Medicare and Medicare supplement policies usually provide benefits to help pay for hospital care and physician services, they provide very limited payment for the cost of long term nursing home care. 

More than 100 companies now offer long term care insurance policies, which will pay you a certain amount of money per day for each day you are in a nursing home. Since nursing home care often costs from $2,500 to $4,000 per month or more, a person's finances can rapidly be exhausted unless payment can be made from some other source. Medicaid does not pay for nursing home care until a person has spent nearly all of his or her available funds.

Long-term care insurance is expensive and is usually worth buying only if there are substantial assets that need to be protected. For persons or families with only limited assets, Medicaid will be available should long term care be required. 

Since so many policies are available, consumers should proceed with caution. 

What You Need To Know 

When deciding whether to buy a long-term care policy, you need to carefully review the policy's terms. Often, there are provisions that can work to your disadvantage. You should ask the following questions: 

Is the policy renewable for life? 

Does the policy cover skilled, intermediate and custodial care? 

Are Alzheimer's disease, senility and other "organically-based mental conditions" covered? 

Is coverage limited to Medicare certified nursing homes? 

Must you have a hospital stay before entry into a nursing home to get benefits? 

Is the insurance company highly rated (A or A+ with A.M. Best Rating Service)? 

Are the premiums competitive? Do the premiums go up as you get older? 

Is there a grace period for late payment? 

What is the deductible? Is there an elimination period before the benefits are payable? Does the deductible or elimination period apply to every admission? 

What is the daily benefit rate? How does it compare to actual charges where you live? Is there an inflation clause? 

What is the maximum benefit period? 

Is home health care covered? Under what conditions? 

What services are covered? RN? LPN? Physical Therapy? Home health aids, homemakers, personal care? 

Where To Go For Help

Many of the questions we have raised are complicated, but they are important in understanding what you are buying. After you have reviewed long term care policies, you may want to have them reviewed by someone independent of the insurance company. 

Many states have insurance commissions or insurance departments that have prepared comparative reviews of different policies available in their states. You can request these from their offices. 

Local Area Agencies on Aging in your community often have an ombudsman who is either familiar with these issues or can refer you to someone who is. 

Your attorney or financial planner may also be a source of independent advice.