Busting Myths About Long-Term Care Insurance

Myth #1  Most long-term care insurance claims are for nursing home careLong-term care insurance facts vs myth image

When the long-term care insurance began in the mid-1960’s, most policies only covered the cost of nursing homes.  It wasn’t until the early 1990’s that insurers began including riders that covered home health care.  Now, it’s considered the norm for long-term care insurance policies to cover the cost of home health care.  According to the American Association for Long-Term Care Sourcebook 2012-13, in 2011 only 31% of claims were for nursing home care, while 56% of claims were for home care.  The home health care industry is booming as more people realize there is a choice: receive care at home.

Myth #2  If you have health problems, you can’t qualify for long-term care insurance

While it’s important to apply for a long-term care policy when you are healthy, just having some health problem will not prevent you from getting a policy.  Once stable, even people with chronic diseases can even receive the preferred health discount.  People with diseases such as high blood pressure, anxiety, high cholesterol, thyroid disorders, skin cancer, osteopenia, mild arthritis, asthma, enlarged prostate, carpal tunnel, GERD, glaucoma, heart murmur, herniated disc, Irritable Bowel Syndrome (IBS), Crohn’s disease, macular degeneration, mitral valve prolapse, kidney stones, benign polyps, scoliosis, TMJ, familial tremors, and ulcers can all be approved for long-term care insurance, depending on the insurer.  It is important to consult a long-term care insurance specialist to help you with your individual situation.

Myth #3  Long-term care insurance is unaffordable

The real question is this: can you afford not to have long-term care insurance?  If you have over $50,000 in assets, or regular income that needs protection, then policies can be designed to be affordable.  Even a small amount of long-term care insurance can make a difference.  According to the Genworth 2013 Cost of Care Survey for California, the average cost of home health care is $140 per day, assisted living facilities average $125 per day, and nursing homes average $230 per day.  For a modest long-term care insurance policy covering $100 per day (90 day elimination period for 3 years), the cost is approximately $100 per month (depending on age and health).  Looking at home health care alone, spending $1,200 per year yields $36,500 in savings.  Clearly, some insurance is better than no insurance.

Myth #4 Long-term care insurance premiums increase every year

Contrary to what is often published on the internet, 4 of the top 10 long-term care insurers have never had any premium increases on any of their policyholders. 2 of the top 10 long-term care insurers have not had any premium increases on any of the policies they’ve sold since the rate stabilization regulations began to take effect in each state (2001-2004).

Additionally, there are two types of long-term care policies that can never have rate increases: Single-pay long-term care policies and limited pay long-term care policies with corresponding rate guarantees.

Single-pay long-term care policies are paid up after just one premium payment.  You make one premium payment and your policy is paid-up forever.  You are covered by the policy for as long as you live.  Since there is only one premium payment, you can never have a rate increase.

Limited-pay long-term care policies are paid up after a fixed number of years (usually between 5 to 10 years).  If a limited-pay policy has a rate guarantee that equals the premium payment period, then the premiums are guaranteed to never go up.

Myth #5  Medicare will pay for my long-term care if I need it

Medicare covers only medical expenses.  Medicaid can pay for long-term care after assets and income have been spent down to the minimum levels required by the state.  This is the very reason to purchase long-term care insurance: to protect your assets and income for your loved ones.

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