Join us as we continue our Stoney Brook blog series on affording senior living. In this article, we’ll discuss long-term care insurance, an important option to consider for those planning for a future move. We’ll review why this insurance can be a valuable asset and share a few of the many questions frequently asked by seniors and caregivers about how this option can help finance assisted living costs.

1. What is Long-Term Care Insurance?

Long-term care insurance is a type of insurance that provides coverage for long-term care services as we age. Many people who learn about long-term care insurance when searching for senior living assume this type of insurance will provide coverage for housing, rental fees, or the cost of living in a retirement community.

Most long-term care insurance policies do not cover the cost of housing or the rental of an apartment, cottage, or other unit. Traditional long-term care insurance typically covers the cost of care services related to activities of daily living (ADLs).

Activities of daily living are the routine tasks and “activities” an individual needs to accomplish to maintain their health, independence, and safety each day. These include activities like walking; getting in and out of a bed, car, or chair; getting dressed; showering; using the restroom; eating; and managing medications appropriately.

2. Will a long-term care policy only cover services provided at home?

Long-term care insurance policies cover services provided in your home and various settings across the healthcare continuum, depending on an individual’s care needs:

• Home health care
• Adult day care
• Independent living & assisted living
• Memory care
• 24/7 care in a family home or senior living community
• Skilled nursing care
• Hospice care

3. What types of services are typically covered by long-term care insurance?

Covered services include assistance or support for an individual to maintain their independence, such as:

•  Personal care: getting dressed, taking a shower, using the restroom, continence care, hygiene tasks, eating, etc.
• Managing medication: assistance with ordering, dosing, and remembering to take medications correctly
• Mobility: getting in and out of bed, getting in and out of a vehicle, general transferring (such as between a bed and chair), escorts to and from locations, with assistance using a wheelchair or walking
• Cognitive changes related to dementia.
• Therapy: physical therapy, occupational therapy, and speech therapy
• 24/7 Care: round-the-clock care at a skilled nursing facility

4. Are there services NOT typically covered by long-term care insurance?

• Non-medical services: non-medical services, such as assistance with laundry, housekeeping, transportation, and meal preparation may not be covered, however, this coverage can vary depending on the policy.
• Dementia care services: dementia care services may or may not be covered, depending on the timing of the dementia diagnosis and enrollment in the policy.
• Other services: care needs related to alcoholism, mental illness, and addiction are not considered covered services or are only covered if the long-term care policy was in place before a diagnosis was received.

5. What is the benefit of a long-term care insurance policy if I do not need care services?

Think about your current care needs or the care needs of your senior loved one. These care needs might be minimal now but predicting future card needs can be tricky. Many independent or assisted living residents will require some kind of assistance and support as they grow older. When this happens, long-term care insurance offers supplemental coverage to manage the additional cost of these supportive care services.

Medicare and traditional health insurance do not provide coverage for these types of services as we age. Care and services to support a senior’s independence, whether provided in a family home or senior living setting, are privately paid for by the individual or family. Costs can quickly add up, placing a financial burden on an aging adult.

A long-term care insurance policy can provide financial relief from costly daily care services if a senior loved one has a fall, illness, or other unexpected health crisis. For seniors with increasing care needs, long-term care insurance may help extend the length of time they can live comfortably in an independent or assisted living community before requiring a move to a nursing home. In a skilled care facility, daily rates can exceed $300 per day.

6. Can long-term care insurance help with assisted living and dementia care?

It’s important to note that a health qualification is needed when enrolling in a long-term care insurance policy. Long-term care insurers can deny coverage to individuals with a current diagnosis of dementia, so it may be necessary to check with multiple companies. If a loved one receives a dementia diagnosis after the policy is in effect, coverage for dementia care may be applied.

Seniors living with dementia in an assisted living setting can utilize their long-term care insurance policy for costs related to memory care services and support, which typically include:

• Assistance with activities of daily living (showering, getting dressed, daily personal care, eating, using the restroom, etc.)
• Enhanced safety checks (routine reminders, escorts to and from activities/ meals, wander protection)
• One-on-one support from additional staff with specialized training in dementia-care best practices.

7. Which long-term care insurance policy is right for me or my loved one?

Before purchasing a long-term care policy, inform your insurance advisor if you are considering a move to assisted living to ensure you have the right coverage. Some policies are traditionally structured, while others are hybrid policies, which may offer some kind of return on investment, or premium, for rare occasions when an individual does not require long-term care services. Ask about the cost, policy requirements, and benefit details, such as the:

• Waiting period: Know the waiting periods for coverage, especially if you are trying to coordinate a senior living move with long-term care insurance benefits.
• Coverage structure: Understand how benefits are reimbursed. Are individual expenses covered as they are billed or does the policy cover only a portion of the services?
• Policy limitations: What limitations are included in the coverage? Some policies may have a daily and/or yearly benefit allowance/amount or specify certain care services that are not covered.
• Benefit and rate changes: Can benefits be adjusted with inflation through the years? How often do the rates increase? Does the coverage change?

8. How much does a long-term care insurance policy cost and how much insurance is needed?

The cost of a long-term care insurance policy is determined by your age, your health and level of independence, and the amount of coverage you are looking for. According to The American Association for Long-Term Care Insurance (AALCI), the average cost of long-term care insurance in 2023 was “around $1,200 per year for a 60-year-old man with $165,000 in coverage, while a 60-year-old woman would pay approximately $1,960 for the same coverage.”

There are numerous factors affecting how much insurance an individual will need, but on average, the National Council of Aging estimates that “women tend to need care for longer (an average of 3.7 years), while men need care for an average of 2.2 years.”

For further evaluation, check out Genworth’s Cost of Care Survey. You can learn more about selecting and qualifying for a policy or receive a free no-obligation quote by contacting the AALCI at (818) 597-3227 or speaking with an experienced long-term care insurance professional.

Long-term Care Insurance: The Right Investment?

Deciding if long-term care insurance is the right investment for you or your senior loved one should prompt a conversation with a trusted financial advisor and an experienced insurance professional. It is also helpful to speak to a senior care counselor who can share details of how long-term care insurance has benefited other residents in situations like your own. With their expertise, you may find that financing a senior living move is more accessible than you think.

To learn more about the financial advantages of moving into a senior living community, check out Stoney Brook’s valuable free resources and subscribe to our blog. Schedule a visit today and experience the benefits of life in our assisted living and memory care communities in Central Texas.