You should NOT buy Long Term Care Insurance if:
- You cannot afford the premiums.
- You have limited assets.
- Your only source of income is a Social Security benefit or Supplemental Security Income (SSI).
- You often have trouble paying for utilities, food, medicine, or other important needs.
- You are on Medicaid.
You should CONSIDER buying Long Term Care Insurance if:
- You have significant assets and income.
- You want to protect some of your assets and income.
- You can pay premiums, including possible premium increases, without financial difficulty.
- You want to stay independent of the support of others.
- You want to have the flexibility of choosing care in the setting you prefer or will be most comfortable in.
How Can You Buy Long Term Care Insurance?
Private insurance companies sell long term care insurance policies. You can buy an individual policy from an agent or through the mail. Or, you can buy coverage under a group policy through an employer or through membership in an association. The federal government and several state governments offer long term care insurance coverage to their employees, retirees and their families. This program is voluntary, and premiums are paid by participants. You can also get long-term care benefits through a life insurance policy.
Individual Policies Today, most long term care insurance policies are sold to individuals. Insurance agents sell many of these policies, but companies also sell policies through the mail or by telephone. You will find that individual policies can be very different from one company to the next. Each company may also offer policies with different combinations of benefits. Be sure to shop among policies, companies and agents to get the coverage that best fits your needs.
Policies From Your Employer Your employer may offer a group long term care insurance plan or offer individual policies at a group discount. An increasing number of employers offer this benefit,16 especially since the passage of the Health Insurance Portability and Accountability Act (HIPAA). HIPAA allows employers the same type of federal tax benefit when they pay for their employees’ long term care insurance as when they pay for their health insurance (except for Section 125 cafeteria plans).
The employer-group plan may be similar to what you could buy in an individual policy. If you are an active employee, one advantage of an employer-group plan is you may not have to meet any medical requirements to get a policy or there may be a relaxed screening process for active employees. Many employers also let retirees, spouses, parents and parents-in-law apply for this coverage. Relatives must usually pass the company’s medical screening to qualify for coverage and must pay the
premium.
Generally, insurance companies must let you keep your coverage after your employment ends or your employer cancels the group plan. In most cases, you will be able to continue your coverage or convert it to another long-term care insurance policy. Your premiums and benefits may change, however.
If an employer offers long term care insurance, be sure to think about it carefully. An employer-group policy may offer you options you cannot find if you buy a policy on your own.
Federal Government Federal and U.S. Postal Service employees and annuitants, members and retired members of the uniformed services, and qualified relatives of any of these are eligible to apply for long term care insurance coverage under the Federal Long Term Care Insurance Program. Private insurance companies underwrite the insurance, and the federal government does not pay any of the premiums. The group rates under this program may or may not be lower than individual rates, and the benefits may also be different.
State Government If you or a member of your family is a state or public employee or retiree, you may be able to buy long term care insurance under a state government program.
Association Policies Many associations let insurance companies and agents offer long-term care insurance to their members. These policies are like other types of long-term care insurance and typically require medical underwriting. Like employer-group policies, association policies usually give their members a choice of benefit options. In most cases, policies sold through associations must let members keep or convert their coverage after leaving the association. Be careful about joining an association just to buy any insurance coverage. Review your rights if the policy is terminated or canceled.
Policies Sponsored by Continuing Care Retirement Communities Many Continuing Care Retirement Communities (CCRC) offer or require you to buy long term care insurance. A CCRC is a retirement complex that offers a broad range of services and levels of care. You must be a resident or on the waiting list of a CCRC and meet the insurance company’s medical requirements to buy its long-term care insurance policy. The coverage will be similar to other group or individual policies.
Life Insurance Policies Some companies let you use your life insurance death benefit to pay for specific conditions such as terminal illness or for qualified long-term care expenses such as home health care, assisted living or nursing home care. A life insurance death benefit you use while you are alive is known as an accelerated death benefit. A life insurance policy that uses an accelerated death benefit to pay for long-term care expenses may also be known as a “life/long-term care” policy. It may be an individual or a group life insurance policy. The company pays you the actual charges for care when you receive long-term care services, but no more than a certain percent of the policy’s death benefit per day or per month. Policies may pay part or all of the death benefit for qualified long-term care expenses. Some companies let you buy more long-term care coverage than the amount of your death benefit in the form of a rider.
Some policies may allow you to withdraw the cash value of your policy to pay for specific conditions and expenses. It is important to remember that if you use money from your life insurance policy to pay for long-term care, it will reduce the death benefit the beneficiary will get. For example, if you buy a policy with a $100,000 death benefit, using $60,000 for long-term care will cut the death benefit of your policy to $40,000. It may also affect the cash value of your policy. Ask your agent how this may affect other aspects of your life insurance policy. If you bought life insurance to meet a specific need after your death, your survivors may not be able to meet that need if you use your policy to pay for long-term care. If you never use the long-term care benefit, the policy will pay the full death benefit to your beneficiary.
