Long-term care involves a wide variety of services for people with prolonged physical or mental illnesses. It is a series of services aimed at people with chronic conditions that limit their ability to function independently. These services may include daily activities such as aid with bathing and dressing, respite care, home health care, adult day care and care in a nursing home. It can range from constant daily care to simple supervision. Whatever the requirements, long-term care can be very expensive depending on the amount and type of care that's needed. It  can severely impact a patient's financial position, but there are currently long-term care insurance policies that can often fill the gap in coverage and allow for the required care.

        Long-term care is not covered by Medicare, Medicare Supplemental insurance, or most major medical plans and the expenses will only be paid by Medicaid if a patient qualifies for the program (please refer to the Medicaid Planning page for more information).  Medicare will cover the cost of some skilled care in approved nursing homes or in the patient's home, but only in certain situations. Also, Medicare would not cover general "nursing home" care or homemaker services and there are limitations on the whether or not it would cover custodial care.
 

    Not everyone should buy a long-term care insurance policy and there are important facts to know before purchasing. For some, a LTC policy is an affordable and attractive form of insurance. For others, the cost is too high or the benefits they can afford are not sufficient. If purchasing the policy will cause a financial hardship, other options should be considered.

        Whether you should buy a policy will depend on your individual particulars: age, health status, overall retirement objectives, and your income.  The need for long-term care can arise gradually as a person slowly needs more aid with daily activities or it can be sudden need following a stroke or a major illness. The need can also be for a short period of time, such as recovering from surgery or an illness or it can extend into months and years. Although it is difficult to predict your future health needs, evaluating your history and your family's history may give you an idea of whether or not such a policy would be necessary. If there is an existing condition that is likely to result in the need for long-term care (such as Alzheimer's or Parkinson's disease), it is unlikely a policy would be available. Insurance companies have medical underwriting standards in place to keep the cost of LTC policies affordable.
 

WHO SELLS LTC INSURANCE?

        Private insurance companies sell LTC policies to individuals or to groups in all types of forums. LTC insurance is available through agents, mail order, senior citizen organizations, fraternal societies, and other groups or associations. Many employers are making LTC insurance available to their employees, the employees' parents and their retirees. A company must be licensed in your state in order to sell a policy and be sure you are dealing with a company or agent that you know. Your state insurance department can offer more information on what companies and agents are licensed in each state.

        Many continuing care retirement complexes will also offer their residents (or people on their waiting lists) an opportunity to purchase a group LTC policy. The coverage provided by the policy is similar to other policies, but is usually designed to complement the fee structure of the continuing care retirement community. Medical screenings are often required when a resident applies for this type of policy.

        Some states have programs that are designed to assist people with the financial consequences of spending down their assets to meet the Medicaid eligibility standards. The "partnership" programs allow individuals to purchase certain qualified long-term care insurance policies and receive full or partial protection against the normal Medicaid spend down requirements. Not all states participate in these programs, but we recommend contacting your state insurance department for more information.

        Your health and health history may affect your ability to purchase a long-term care insurance policy. Some conditions can disqualify you from coverage, but each company has its own underwriting. You must answer the health questions honestly or the company can later rescind or cancel your policy. People with pre-existing conditions may still be able to purchase policies, but the company may not benefits for complications related to the pre-existing condition for a set period of time after the policy becomes effective. Companies also vary the amount of time that they look back at your health status.

        Most states have laws that require that the policies being sold be guaranteed renewable- the insurance company guarantees it will offer you the opportunity to renew the policy and maintain the coverage, but it may not offer the same price.

        You should also check on the financial stability of the company before you purchase a policy. There are several private companies or ratings agencies that can provide you with information about how well the insurance is handling its claims and current customers. You can get this information for free at most public libraries. A couple of good rating agencies to check include A.M. Best Company and Moody's Investor Service.