Long Term Care (LTC) Insurance

You have worked hard to save and plan for retirement and you are ready to enjoy this new segment of your life buy what happens if you to incur a chronic medical condition, Alzheimer’s / Dementia or become disabled. Chances are you are going to need someone to help you with your daily activities and even self-care such as toileting and getting dressed. The big question is how are you going to pay the bill without draining your retirement?

A long-term care (LTC) insurance policy may be exactly what you need. LTC insurance covers expenses that are not covered by regular insurance such as bathing, dressing, getting in and out of bed and going to the bathroom for example. These are commonly called ADL’s (Activities of Daily Living).

A LTC insurance policy will reimburse you for services that are provided in your home, nursing home, an assisted living facility or an adult day care center.

A long-term care insurance policy helps cover the costs of that care when you have a chronic medical condition, a disability or a disorder such as Alzheimer’s disease. When we start getting closer to retirement age things start to get very real. You do not want huge financial bills hanging over your head. You want peace of mind. The key is to plan ahead and not wait until you need the insurance. You will have difficulty obtaining a LTC insurance policy if you already have a debilitating medical condition. The typical age to obtain LTC insurance is in your mid-50’s to mid-60’s.

Contact your Arena agent today at 1-888-502-7362 (1-888-50-ARENA).

Why buy long-term care insurance?

According to a study by the Urban Institute and the U.S. Department of Health & Human Services an approximately 50% of people aged 65 will eventually develop a disability and have a need for long-term care services.

Medicare does not cover long-term care. Medicare only covers short term nursing stays and/or limited amounts of home health care when you require skilled nursing or rehab. It does not pay for custodial care, which includes help with ADL’s

Regular health insurance doesn’t cover long-term care. And Medicare won’t come to the rescue, either; it covers only short nursing home stays or limited amounts of home health care when you require skilled nursing or rehab. It does not pay for custodial care, which includes supervision and help with day-to-day tasks.

If you don’t have insurance to cover long-term care, you’ll have to pay for it yourself. You can get help through Medicaid, the federal and state health insurance program for those with low incomes, but only after you’ve exhausted most of your savings.

People buy long-term care insurance for two reasons:

To protect savings. Long-term care costs can deplete a retirement nest egg quickly. The median cost of care in a semi-private nursing home room is $89,297 a year, according to Genworth’s 2018 Cost of Care Survey.


To give you more choices for care. The more money you can spend, the better the quality of care you can get. If you have to rely on Medicaid, your choices will be limited to the nursing homes that accept payments from the government program. Medicaid does not pay for assisted living in many states.

Buying long-term care insurance might not be affordable if you have a low income and little savings. The National Association of Insurance Commissioners says some experts recommend spending no more than 5% of your income on a long-term care policy.


How long-term care insurance works

You choose the amount of coverage you want. The policies usually cap the amount paid out per day and the amount paid during your lifetime.

Under most long-term care policies, you’re eligible for benefits when you can’t do at least two out of six “activities of daily living” called ADLs, on your own or you suffer from dementia or other cognitive impairment.

The activities of daily living are:

⦁ Bathing.
⦁ Caring for incontinence.
⦁ Dressing.
⦁ Eating.
⦁ Toileting (getting on or off the toilet).
⦁ Transferring (getting in or out of a bed or a chair).

When you need care and want to make a claim, the insurance company will review medical documents from your doctor and may send a nurse to do an evaluation. Before approving a claim, the insurer must approve your “plan of care.”

Under most policies, you’ll have to pay for long-term care services out of pocket for a certain amount of time, such as 30, 60 or 90 days, before the insurer starts reimbursing you for any care. This is called the “elimination period.”

The policy starts paying out after you’re eligible for benefits and usually after you receive paid care for that period. Most policies pay up to a daily limit for care until you reach the lifetime maximum.

Some companies offer a “shared care” option for couples when both spouses buy policies. This lets you share the total amount of coverage, so you can draw from your spouse’s pool of benefits if you reach the limit on your policy.

Cost of long-term care insurance

The rates you pay depend on a variety of things, including:

⦁ Your age and health: The older you are and the more health problems you have, the more you’ll pay when you buy a policy.
⦁ Gender: Women generally pay more than men because they live longer and have a greater chance of making long-term care insurance claims.
⦁ Marital status: Premiums are lower for married people than single people.
⦁ Insurance company: Prices for the same amount of coverage will vary among insurance companies. That’s why it’s important to compare quotes from different carriers.
⦁ Amount of coverage: You’ll pay more for richer coverage, such as higher limits on the daily and lifetime benefits, cost-of-living adjustments to protect against inflation, shorter elimination periods, and fewer restrictions on the types of care covered.

A single 55-year-old man in good health buying new coverage can expect to pay an average of $2,050 a year for a long-term care policy with an initial pool of benefits of $164,000, according to a 2019 price index from the American Association for Long-Term Care Insurance. Those benefits compound annually at 3% to total $386,500 at age 85. For the same policy, a single 55-year-old woman can expect to pay an average of $2,700 a year. The average combined premiums for a 55-year-old couple, each buying that amount of coverage, are $3,050 a year.

A caveat: The price could go up after you buy a policy; prices are not guaranteed to stay the same over your lifetime. Many policyholders saw spikes in their rates in the last several years after insurance companies asked state regulators for permission to hike premiums. They were able to justify rate increases because the cost of claims overall were higher than they had projected. Regulators approved the rate increases because they wanted to make sure the insurance companies would have enough money to continue paying claims.

Tax advantages of buying long-term care insurance

Long-term care insurance can have some tax advantages if you itemize deductions, especially as you get older. The federal and some state tax codes let you count part or all of long-term care insurance premiums as medical expenses, which are tax deductible if they meet a certain threshold. The limits for the amount of premiums you can deduct increase with your age.

Only premiums for “tax-qualified” long-term care insurance policies count as medical expenses. Such policies must meet certain federal standards and be labeled as tax-qualified. Ask your insurance company whether a policy is tax-qualified if you’re not sure.

Senior Insurance

Protecting your health is our number one priority

The types of coverage we can provide include:

    • Life Insurance Here is another maze! What is Term Life? Universal Life? Whole Life?
    • Supplemental Coverage that sends you cash payments sometimes within 72 hours!
    • Disability insurance provides income to you if are unable to work.
    • Vision & Dental Arena agents can explain the benefits and where most people get loss on this coverage.
    • Auto Insurance
    • RV/ Motorhome
    • Motorcycle Insurance
    • Renter’s Insurance
    • Home Insurance
    • Property Insurance
    • Business Insurance
    • And much more

Contact your Arena Agent at 1-888-502-7362 (1-888-50-ARENA).