What is Long-term Care Insurance? Long-term care insurance is a type of insurance designed especially for seniors. It covers the costs of long-term care and health care services, which include daily activities such as bathing, eating, dressing, skilled nursing care, and rehabilitation training (often referred to as “activities of daily living” or ADLs). Long-term care insurance also deals with care-oriented activities for people with cognitive impairments such as Alzheimer's or Parkinson’s. Long-term care insurance covers services provided in your home, or in a nursing home, assisted living facility, or adult day-care facility.

Common Misconceptions. Many people believe Medicare, Medicaid, or other health plans pay for their long-term care costs. However, these plans typically do not cover ongoing chronic health care, or help people with ADLs over a long period of time. Medicare has eligibility requirements for skilled nursing care only, and is for a limited time period. Medicaid is a welfare program, and will not cover long-term health care costs. Regular health insurance and medical supplements also do not cover nursing home care. Care expenses can add up quickly and end up costing individuals and families their savings and assets.

Why Get It? If you have assets of $30,000 or more (excluding your house), you want to choose where to receive long-term care (in your home or in a facility), and you do not want the financial and day-to-day burden of your care to fall on your family, you may want to consider a long term care policy.

When To Apply. Apply While You’re Still Healthy. Getting long-term care insurance is not always easy. To qualify for a policy, you must pass medical underwriting standards. Certain pre-conditions could disqualify you, such as having had a stroke recently, or having been diagnosed with dementia. Also, certain combinations of conditions may preclude your approval. So, it is very important to apply for long-term care insurance while you’re in good health. Different insurance companies may evaluate conditions differently so check with more than one insurance company. If one company denies your application, another might accept it. Lower Age = Lower Premiums. Since the cost of insurance is generally based on your age when you apply, the younger you are when you apply, the lower your premiums. So, both to ensure coverage, and to pay less, find out sooner rather than later if you are eligible to enroll. If you are approved for coverage, always pay your premiums on time to meet the insurance carrier’s criteria for payment of benefits later.

Costs. Numerous companies all over the country provide long-term care insurance. Rates can vary greatly, depending on your age, where you live (long-term insurance is state-regulated so policies vary from state to state), and whether you choose a comprehensive, nursing home, or home care package. The average cost for an individual policy for a senior between the age of 65 and 69 is around $212 per month. (This would cover approximately 5 years of coverage at about $160 per day.) Although this may seem costly, long-term care insurance policies that meet certain standards receive favorable tax benefits. You can deduct long-term care insurance premiums as medical expenses for income tax purposes.  Make sure you find a plan that covers the kind of long-term care you want. Long-term care insurance is not for everyone: if you are worried you can’t afford the premiums, if your income comes solely from Social Security, or if you’re struggling to meet your basic monthly living expenses, coverage may not be the right choice for you.

Your Home or a Nursing Home? If you want to receive long-term care in your own home, or want family members or friends to help as care-givers, consider a “comprehensive” option: this provides benefits for both facility care and in-home care. If lower premiums are your priority, then consider a “facilities-only” option, which is less expensive.

Research your coverage options as soon as possible, so you can find the appropriate plan for you, obtain coverage while you’re eligible, and purchase coverage at the right age to ensure the lowest price.