Preparing for the care you may need
Extended care is generally not covered by Medicare or regular health insurance, so it helps to understand your options early.
Long-Term Care
Care, planned ahead
I explain how long-term care can be paid for, so you and your family can weigh the options before care is needed.
Coverage I explain
- Traditional long-term care insurance
- Hybrid life and long-term care policies
- Long-term care riders
- Paying for care from savings
What I look at
- Where you would want to receive care
- Your savings and retirement income
- Your health and family history
- Who in your family might help
Why it matters
Why it helps to plan early
Care needs can arrive slowly or suddenly, and decisions made in a hurry are harder on everyone.
What long-term care means
Help with everyday activities, such as bathing, dressing or eating, over a long period, at home, in assisted living or in a nursing home.
Who pays for it
Medicare and regular health insurance generally do not cover extended care. Medicaid may, for people who meet its eligibility rules, which vary by state. Otherwise, care is paid from savings, income or insurance.
Health and timing
Long-term care coverage is based on your health when you apply, so the options available can narrow as your health changes.
Your family
A plan can ease the pressure on a spouse or children, who often become caregivers or decision makers.
Ways to pay for care
Three ways people plan for care
How the common approaches compare, and what to check with each.
| Feature | Traditional long-term care insurance | Hybrid life or annuity coverage | Paying from savings |
|---|---|---|---|
| What it is | A policy that pays for qualifying care, up to the limits you choose | Life insurance or an annuity with long-term care benefits built in | Paying for care from your own savings and income |
| If care is never needed | Premiums are generally not returned | A death benefit may pass to your beneficiaries | Your savings remain yours |
| Payments | Ongoing premiums, which can change over time | Often a single payment or a set number of payments | None in advance |
| Your health | Coverage is based on your health when you apply | Coverage is based on your health when you apply | Not a factor |
| Things to check | Benefit amount, benefit period, waiting period and inflation protection | How care benefits reduce the death benefit, surrender charges and rider costs | How long your savings could cover care alongside your other needs |
Traditional long-term care insurance compared with hybrid coverage and paying from savings
What it is
- Traditional long-term care insurance
- A policy that pays for qualifying care, up to the limits you choose
- Hybrid life or annuity coverage
- Life insurance or an annuity with long-term care benefits built in
- Paying from savings
- Paying for care from your own savings and income
If care is never needed
- Traditional long-term care insurance
- Premiums are generally not returned
- Hybrid life or annuity coverage
- A death benefit may pass to your beneficiaries
- Paying from savings
- Your savings remain yours
Payments
- Traditional long-term care insurance
- Ongoing premiums, which can change over time
- Hybrid life or annuity coverage
- Often a single payment or a set number of payments
- Paying from savings
- None in advance
Your health
- Traditional long-term care insurance
- Coverage is based on your health when you apply
- Hybrid life or annuity coverage
- Coverage is based on your health when you apply
- Paying from savings
- Not a factor
Things to check
- Traditional long-term care insurance
- Benefit amount, benefit period, waiting period and inflation protection
- Hybrid life or annuity coverage
- How care benefits reduce the death benefit, surrender charges and rider costs
- Paying from savings
- How long your savings could cover care alongside your other needs
How a policy works
Four terms worth knowing
The same few ideas appear in almost every long-term care policy.
01 Benefit triggers
Benefits generally begin when you need help with a set number of daily activities, such as bathing or dressing, or have a severe cognitive impairment, as certified by a licensed health care practitioner.
02 The waiting period
Also called the elimination period: the number of days you pay for care yourself before benefits begin.
03 Benefit amount and period
The most a policy pays each day or month, and for how long, or up to a total pool of benefits.
04 Inflation protection
An optional feature that raises your benefit over time, for an added cost.
FAQs
Answers to questions I hear often. They explain how things work; your own situation is worth a conversation.
01.
Does Medicare pay for long-term care?
Medicare generally does not cover extended care at home or in a facility. It may cover a limited period of skilled care after a qualifying hospital stay.
02.
What is the difference between traditional and hybrid coverage?
Traditional long-term care insurance pays for qualifying care in exchange for ongoing premiums. Hybrid policies combine life insurance or an annuity with long-term care benefits, so a death benefit may pass to your beneficiaries if care is never needed. Each has its own costs and trade-offs.
03.
What is a benefit trigger?
The condition that starts benefits: usually needing help with a set number of daily activities, or a severe cognitive impairment, as certified by a licensed health care practitioner.
04.
Can my premiums change?
On traditional policies, premiums can rise over time when state regulators approve an increase. Hybrid policies often have set payments. It is worth asking how a policy’s premiums can change before you choose.
05.
Can you help me qualify for Medicaid?
No. Medicaid eligibility and planning are legal questions, and the rules vary by state. Lotus Management does not provide legal advice. I explain how long-term care can be paid for, and encourage you to speak with an elder law attorney.
06.
When should I start thinking about long-term care?
Well before you expect to need it. Coverage is based on your health when you apply, so it is worth the conversation while your options are widest.
Talk it through with Karen
For one-on-one questions, a Complimentary Discovery Call is a good place to start.
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