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Long Term Care

Long Term Care Insurance

Last Updated 10/5/2020

Issue: The long-term care insurance (LTCI) market has evolved significantly since the introduction of LTCI in the 1960s. In the past decade, the market has grown from covering fewer than three million lives to now covering approximately seven million lives. According to the U.S. Department of Health and Human Services (HHS), about 12 million of America’s senior citizens will require long-term care by 2020.

Despite the growing need, the number of insurers offering LTCI coverage has decreased from slightly over 100 in 2004 to about a dozen in 2018. Additionally, premium rates for newly-issued policies have risen as the remaining writers have refined their pricing.

LTCI policies incorporate a number of long-term care (LTC) service alternatives, including home health care, respite care, hospice care, personal care in the home, services provided in assisted living facilities, adult day care centers and other community facilities. Public programs, such as Medicare and Medicaid, also cover certain limited LTC services. As our population ages, the need for LTC support and services will increase and require innovative new approaches. More on this topic and other issues related to the aging population can be found in the presentation videos for the CIPR’s June 16, 2015 symposium, Boom or Bust? A Look into Retirement Issues Facing Baby Boomers.

The decision to purchase LTCI and the premium charged may be influenced by one’s age and life expectancy, gender, family situation, health status, income and assets.

  • Age and Life Expectancy: The younger you are when you purchase an LTCI policy, the lower your premiums will be. The longer one lives, the more likely the need for LTC.
  • Gender: Women are more likely to need LTC, because, on average, they have longer life expectancies than men.
  • Family Situation: If a family member is not available to provide care, paid care, provided inside or outside the home, may be the only alternative.
  • Health Status: A family history of chronic or debilitating health conditions could indicate a greater probability of requiring LTC in the future.
  • Income and Assets: An LTCI policy may be used to protect accumulated assets. Some experts recommend LTCI premiums should not exceed five percent of income.

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The Value of Long Term Care Coverage

If a picture is worth a thousand words, imagine what a concept video about Long Term Care Insurance is worth. This video demonstrates the value of LTC coverage and its ability to help protect people’s retirement.

For details or illustrations, please give me a call. We work with several carriers and will be able to provide different options.

Does Medicare Pay For Long-Term Care? Don’t Make A Big Mistake!

Original Article Found Here

Rusty had paid for a long-term care policy for many years. Then, one day, his daughter found a cancelation notice for nonpayment of premiums sitting on his desk. 

“Dad, why are you not paying the premiums for this policy?”

“Because I have Medicare and my pipe trade’s policy. I don’t need that one.”

“Dad, get out your checkbook. We’re going to the FedEx office and sending in the payment.”

Three weeks later, Rusty suffered complications from prostate cancer and could not manage his care. He was admitted to a long-term care facility where he lived until his death 13 months later. The long-term care policy paid its share every day, the difference between Rusty keeping or having to sell his farm.

Rusty (full disclosure: Rusty was my father) fell for one of the biggest Medicare myths ever: that Medicare covers long-term care. He wasn’t alone in thinking that. 56% of middle-income Baby Boomers believe that Medicare will pay for their ongoing long-term care.

Medicare does not now and never has covered long-term care.

Problems tend to arise because there’s so much confusion about long-term care, LTC, for short. This Q&A should help clarify some of the issues. 

What is long-term care?

Long-term care, often called custodial care, is a range of services and support to meet health or personal care needs over an extended period of time. This is non-medical care provided by non-licensed caregivers.

Who needs long-term care and why?

Maybe, eventually, every one of us will need this care. Consider these statistics. 

  • A person turning 65 today has almost a 70% chance of needing some type of long-term care services and support in their remaining years. 
  • 20% of those turning 65 will need care for longer than five years. 
  • About 35% of people who reach age 65 are expected to enter a nursing home at least once in their lifetime.

The need for long-term care comes into play when the aging process begins to take effect and one loses the ability to perform activities of daily living (ADL). The six essential ADL include the ability to eat independently, dress, walk or transfer from one position to another, bathe, and toilet, and maintain bowel and bladder continence.

Those needing long-term care have a variety of physical and mental characteristics. However, arthritis and Alzheimer’s disease or other dementias top the list of medical conditions contributing to a need for-long-term care. 

Where is long-term care provided?

A variety of settings provide long-term care, including 

  • An adult day-care center
  • A nursing home
  • An assisted living facility or residential care community, and 
  • The most common location, the home, with care provided by a family member or friend. In 2017, over 40 million caregivers provided the equivalent of $470 billion in unpaid assistance.  

Why do so many believe that Medicare pays for long-term care?

The confusion likely stems from the services that Medicare Part A, hospital insurance, will cover. Two of those are inpatient care in a skilled nursing facility (SNF) and home health care, common settings for long-term care.

So, you may wonder. If a person moves into a nursing home because she needs long-term care or a homecare agency sends an aide to the home to help a patient with bathing, why doesn’t Medicare pay? Simple answer: Medicare pays for care that is skilled, meaning that it requires the skills of a registered nurse, physical therapist, occupational therapist, or speech-language pathologist. If the average non-medical person can provide the care without additional training, the care is not skilled and Medicare will not pay for it. 

The person is in a nursing home because she is not safe at home and needs help with ADL. It doesn’t take a nurse to bathe a person in her home. Contrast that to skilled care. The person who had a stroke goes to a nursing home for rehabilitation. Once home, a physical therapist visits to set up a home program, and coordinate equipment. 

How can you pay for long-term care?

Let’s be very clear: Medicare does not pay for long-term care. But this care can be very costly. In 2013, total national spending on long-term care services was almost $339 billion. What options are available to help with the cost?

Traditional long-term care policy.

This type of insurance will pay or reimburse for some or all long-term care costs. Many long-term care insurance policies have limits on how long or how much they will pay. These policies can also become costly over time.

Insurance companies can consider health conditions when determining eligibility for coverage. The older the applicant, the more likely he won’t qualify. In 2019, almost one-third of applicants ages 65-69 were denied coverage. 

The type of coverage depends on the individual’s health, financial status, age at application, and other factors. A professional advisor who knows about these policies and the different options can guide the application process. 


An annuity is essentially a contract with an insurance company. An individual purchases an annuity that the insurance company pays back over a defined period of time. It’s possible to get guaranteed payments for life, even if the amount paid back exceeds the original investment. 

Annuities offer an option for those who want to plan for long-term care expenses in retirement, which could be many years into the future. Given the variety (fixed, indexed, immediate, and variable, to name a few), it’s best to work with a knowledgeable, trustworthy financial professional.

Combination or hybrid products–life insurance with a long-term care rider.

Consumers tend to worry that they will lose the money they spend on long-term care insurance if they don’t use it. In recent years, insurance companies have taken steps to ease these concerns. 

These relatively new products combine life insurance with long-term care insurance. The idea is that policy benefits will always be paid, in life insurance or long-term care. A policy holder can access some or all of the policy’s death benefit for long-term care that meets the company’s requirements. These combination products are still evolving. An agent can help explain the ins and outs.

Health savings account (HSA). 

HSA funds can help cover many long-term care expenses. According to the IRS, qualified medical expenses “also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract.” Qualified long-term care services include maintenance and personal care services that a chronically ill individual requires.

Reverse mortgage. 

A reverse mortgage is a special type of home equity loan that allows the mortgage holder to receive cash against the value of a home without selling it. An approved reverse mortgage counselor can discuss the  many considerations, including how the mortgage will work, the criteria for spending the funds, and what heirs need to know. 

Charitable remainder trust.  

A charitable remainder trust allows one’s assets to pay for long-term care services while contributing to a charity and reducing the tax burden at the same time. Payments from the trust can cover long-term care services and, after death, the balance of the funds in the trust goes to the charity.

Medicare Advantage plans. 

Recent policy changes now allow Medicare Advantage plans to cover supplemental healthcare benefits for “daily maintenance.” These benefits may include ADL assistance, transportation to medical appointments, meals after hospitalization, even chow for a service dog. Some plans offer one benefit, others may offer more. The offerings are limited, generally to one benefit in a calendar year and the plan will likely require prior authorization and impose network limitations. 

Not all Medicare Advantage plans offer these benefits and it is the Medicare Advantage plan, and not Medicare, that pays for these services. 


This program is funded jointly by individual states and the federal government. Medicaid benefits are guaranteed to pregnant women, children, disabled individuals, and the elderly, who meet certain income limits. One of the benefits is long-term care. 

Those who don’t qualify for Medicaid because their assets are too high have to pay for long-term care. Then, once their assets are low enough, they can qualify for Medicaid coverage. Every state has its own enrollment process, qualification criteria and policies. Find information about a specific state program on 

How can you start planning for long-term care

Here are some beginning steps. 

1.   Learn about long-term care, the different options, and what’s available in your community.

2.   Work with a trusted financial advisor to develop a plan to cover the costs. Consider these two scary statistics. 

  • Fewer than 35% of Boomers have a plan for how they will receive care in retirement.
  • Almost 80% have no money set aside specifically for their long-term care needs. 

3.   Determine who can play a role in your plan. Do not expect your family to be the sole source of support. Explore community resources and caregiving options. 

4.   Incorporate your wishes into the plan. Do you have an up-to-date will, advance health care directive and durable power of attorney for healthcare? Include in your plan important financial information and your long-term care wishes. 

5.   Share the plan with family members, healthcare providers, anyone who you believe will be involved or needs to know. 

Those who believe that Medicare will pay for long-term care or that this care involves long-term care insurance or living in a nursing home may be woefully unprepared for the future. It’s never too late to put together a long-term care plan, your personal strategy for handling decisions in the future. 

The 10 Absolutes for Caregivers

Never ague, instead agree

Never reason, instead divert

Never shame, instead distract

Never lecture, instead reassure

Never say remember, instead reminisce

Never say ‘I told you so’, instead repeat/ regroup

Never say ‘you can’t’, instead say ‘let’s do this’

Never command or demand, instead ask or model

Never condescend, instead encourage and praise

Never force, instead reinforce

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10 Reasons You May Want Long Term Insurance

Carrera Brokerage is here to help with your concerns and options.

Resources from the National Association of Insurance Commission (NAID)

Long Term Care can be confusing. Here is some information from the NAID.

Reviewing these 10 items can be helpful when considering your options.

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  • Long-Term Care is Different From Traditional Medical Care
    Someone with a prolonged physical illness, a disability or a cognitive impairment such as Alzheimer’s disease often needs long-term care. Long-term care services may include help with daily activities, home health care, respite care, hospice care, adult day care, care in a nursing home or care in an assisted living facility.
  • Long-Term Care Can be Expensive
    The cost depends on the type of care provided. In 2017, the U.S. average for nursing home care was $82,125 per year. In assisted living facilities it was $43,435 per year. Home health care is priced hourly at approximately $21 per hour, per home health aide.
  • You Have Options When Paying for Long-Term Care
    These include using personal resources, long-term care insurance and Medicaid for those who qualify. Medicare, Medicare supplement insurance and health insurance you may have at work usually will not pay for long-term care.
  • Decide Whether Long-Term Care Insurance is for You
    Whether you should buy a long-term care insurance policy will depend on your age, health status, overall retirement goals, income and assets. Premiums are expensive. If your only source of income is a Social Security benefit or Supplemental Security Income (SSI), you probably are not suited to buy long-term care insurance. On the other hand, if you have means to pay premiums and assets you wish to protect, a long-term care insurance policy may be right for you.
  • Pre-Existing Condition Limitations
    A long-term care insurance policy usually defines a pre-existing condition as one for which you received medical advice or treatment or had symptoms within a certain period before you applied for the policy. Some companies look further back in time than others. Many companies will sell a policy to someone with a pre-existing condition. However, the company may not pay benefits for long-term care related to that condition for a period after the policy goes into effect, usually six months. Some companies have longer pre-existing condition limitations or none at all.
  • Know Where to Look for Long-Term Care Insurance
    Long-term care insurance is available to you in several different forms. You can buy an individual policy from a private insurance company or agent, or you can buy coverage under a group policy through an employer or association membership. The federal government and several state governments offer long-term care insurance coverage to their employees, retirees and their families. You can also get long-term care benefits through a life insurance policy. Some states have long-term care insurance programs designed to help people with the financial impact of spending down to meet Medicaid eligibility. Check with your state insurance department or counseling program to see if these policies are available in your state.
  • Check With Several Companies and Agents
    Contact several companies and agents before you buy a long-term care policy. Be sure to compare benefits, the types of facilities covered, limits on your coverage, what is not covered and the premium. Policies from different insurance companies often have the same coverage and benefits but may not cost the same. Be sure to ask companies about their rate increase history and whether they have increased the rates on the long-term care insurance policies.
  • Don’t be Misled by Advertising
    Most celebrity endorsers are professional actors paid to advertise, not insurance experts. It is also important to note that Medicare does not endorse or sell long-term care insurance policies, so be wary of advertising that suggests Medicare is involved. Do not trust cards you get in the mail that look like official government documents until you check with the government agency identified on the card.
  • Make Sure the Insurance Company is Reputable
    To help you find out if an insurance company is reliable, you can take the following actions: Stop before you sign anything, call your state insurance department and confirm that the insurance company is licensed to do business in your state. After you make sure they are licensed, check the financial stability of the company by checking their ratings. You can get ratings from some insurer rating services for free at most public libraries.
  • Review Your Contract Carefully
    When you purchase long-term care insurance, your company should send you a policy. You should read the policy and make certain you understand its contents. If you have questions about your insurance policy, contact your insurance agent for clarification. If you still have questions, turn to your state insurance department or senior insurance counseling program.