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Does long term care insurance cover assisted living expenses?

Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella...

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UPDATED: Mar 19, 2020

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Yes, long term care insurance covers assisted living expenses. Long term care insurance is meant to help the insured with costs that come from hiring someone or moving into a long-term care setting such as a nursing home or assisted living facility because the insured needs assistance with day to day activities.

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Qualified people can buy long term care insurance at any point in their lives, but you are not eligible to begin collecting on the benefits until several of the insurance company’s criteria has been met.

This usually means that you need assistance with at least a specific number of daily tasks or activities of daily living. There is no age limit to when you can begin collecting benefits. In fact, an estimated 40% of those who use long term care insurance are under the age of 64.

How does long term care insurance work?

Long term care insurance was developed to cover costs of services that are not covered by Medicare or regular health insurance, such as activities of daily living (bathing, grooming, eathing, continence, etc…) as well as those services provided by community and facility health care settings.

You can buy long term care insurance at any time, and can buy a variety of services, but premium costs will be lower the younger you are when you buy the policy. And, if you are in poor health when you finally seek to purchase this insurance, you may not be eligible for coverage, may only be eligible for limited coverage, or may be charged higher premiums.

Most policies have a limited benefit maximum, whether a certain number of years or a maximum amount of money. Most last somewhere from one to five years, though there are some that offer a lifetime policy. The lifetime policies are becoming fewer and fewer; others that simply offer a very high coverage may be available.

Your policy will pay a daily benefit amount that you will determine when you purchase it. You can most often choose anywhere from $50 a day to $500 a day. Some policies may name their benefits in terms of amount per week or per month, to provide their costumers with more flexibility in care.

You will also determine if you want an indemnity or expense incurred policy. An indemnity policy will pay you the same amount each day/week/month, regardless of how much you used or did not use. An expense incurred will reimburse you actual cost.

There are many other options you will pick and choose from when you purchase your policy, from your lifetime benefit amount, to whether you want comprehensive care or facility care only (if you want the option to have care at home), to inflation protection riders that build in the cost of living. Find out more about all your options before you decide on your final policy.

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What isn’t covered?

Long term care insurance, like all other kinds of insurance, comes with exclusions. Most policies generally exclude care by family members who are not regular employees of the health care organization that provides that specific care or treatment. Even in that case, the organization itself has to receive and process the payment.

They also usually exclude:

  • Treatment outside of the United States (some policies offer an International Care benefit)
  • Care as a result of war or a suicide attempt
  • Care for drug or alcohol addition; or
  • Benefits that are usually available from a government program (like Medicare, except Medicaid), worker’s comp or some other program

When should I purchase coverage?

As said earlier, long term care insurance policies get more expensive the older the individual gets. As of 2007, a policy was at least $881 dollars a year for someone who initially purchased the policy when he or she was less than 40 years old. Someone who waited until he was 60 paid $2,249, while someone who waited until 70 paid $3,026 a year. The average premium was just over $2,000.

It may make no sense for your budget or lifestyle to purchase this kind of insurance when you are 40, as you may not be collecting any benefits for 30 or 40 years and you may feel that your money is better put in life insurance because you have small children you are concerned about. These are all important things to consider when purchasing any kind of insurance. What do you need it for, and what are the real benefits?

But it doesn’t hurt to look. Use the free online quote tool to get an idea of what your options are with various companies and various insurance plans. Begin your research now, so that you are ahead of the game!

Enter a zip code into the free rate tool and get several long term care insurance quotes to compare now!

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