Solomon & Hoover CPAs, PLLC Blog

As health care costs soar and Americans live longer, long-term care (LTC) insurance is becomingly increasingly popular. If you’re healthy and between the ages of 50 and 65, this may be the ideal time to buy a policy. But before you do, get the facts about the benefits — and risks — of LTC coverage.

What does it cover?

LTC policies cover many care-related costs associated with debilitating health conditions. Although health insurance and Medicare generally pay for short-term care, they don’t cover the expensive long-term in-patient or at-home nursing and custodial care that chronically ill or disabled patients may need to perform basic life activities such as dressing, bathing and eating.

Most LTC policies have maximum daily and lifetime benefits. Depending on the policy, it may cover only nursing-home care or pay for everything from in-home assistance to adult day care to a hospice stay. Policies also contain “elimination” or waiting periods before benefits kick in — typically between 30 and 90 days.

What does it cost?

LTC policies are relatively expensive, and those with higher maximums, broader care options and shorter elimination periods cost more. But your premiums generally will be lower if you buy a policy when you’re younger than 65.

Other factors that contribute to the cost of LTC insurance include:

• Your current physical health and cognitive ability,
• Your family medical history,
• Whether you smoke, and
• Whether you engage in risky activities, such as piloting a small plane.

Applicants who already require LTC or have been diagnosed with such illnesses as Alzheimer’s, AIDS or metastasized cancer typically don’t qualify for coverage.

What’s the alternative?

Of course, there’s always the risk that you’ll pay hefty LTC insurance premiums for years and never need the benefits. For this reason, those with ample financial resources — generally a couple with at least $2.5 million in assets — might be better off paying any LTC costs out-of-pocket.

Your estate planning goals also should factor into your LTC insurance decision. Is coverage likely to preserve assets for your heirs? If so, they may be willing to pay your premiums. On the other hand, family members may be available to assume caretaker roles — in which case you might not need LTC insurance.

An informed decision

To ensure you make an informed decision about LTC insurance, discuss your options with your family and your financial and estate planning advisors. Your well-being and financial future depend on it.