What is long term care?

Long term care (LTC) refers to a variety of medical care, personal assistance and social support services for people who are physically or mentally unable to independently care for themselves for an extended period, due to accident, illness or old age. These individuals typically need assistance performing basic activities for daily living. Patient care may be provided in the patient’s home, or at an assisted living facility or nursing home.

What is long term care insurance?

Since long term care can quickly become very expensive, long term disability insurance is designed to protect individuals against incurring large out-of-pocket expenses in the future by paying affordable monthly premiums in the present. Long term care insurance policies available include:

  • Individual long term care insurance
  • Group long term disability insurance

Individual policies are generally purchased by people whose employers do not offer a group policy, or by those who feel that they need to supplement their employer’s policy to obtain the most coverage possible. If employers and associations offer long term care insurance to employees in the form of a group long term care insurance policy, the policy may not offer the same level of protection afforded by individual long term care insurance policies. Prior to purchasing a group policy, it is wise to compare the level of protection offered and the level of protection guaranteed in comparable individual policies. Long-term care insurance policies should also clearly state if they are individual or group policies.

How does long term care differ from disability insurance?

Although long term care insurance evolved from income disability insurance, major medical insurance or disability insurance does not protect a policyholder in the same way. Unlike a health plan that may cover 30 days of recuperative time, a long term plan will cover two years or more. Beyond that, disability insurance replaces only salary at the time of the injury, and does not cover the cost of care. The policyholder would then have to pay out-of-pocket for any ongoing long term medical care due to his or her accident or injury.

Will Medicare cover the expenses of long term care?

Medicare should not be considered as a resource for handling any substantial long term care expenses. Medicare reimburses the qualified user for a maximum of 100 days, with the average period for repayment of expenses being a mere 28 days. This will not suffice, as long term care can be extremely expensive.

How are long term care insurance policies designed?

A long term care insurance policy covers any or all of the following types of services:

  • Nursing home
  • Assisted living facility
  • Adult day care center
  • Home health care
  • Personal care

Premiums are generally determined by the employee’s age at the time of enrollment and the benefits provided by the policy.

Most long term care insurance policies pay a daily maximum benefit and a lifetime maximum benefit. Actual benefits are chosen at the time the policy is purchased. The daily maximum benefit for most long term care insurance policies is usually less than the cost of one average day of long term care service.

Most carriers offer two types of inflation protection:

  • Automatic inflation protection, in which benefits increase at a fixed percentage while the premium does not increase
  • Special offer inflation protection, in which the purchaser can choose to increase benefits periodically. The premium will increase if the benefits are increased.

Most states have adopted regulations that require companies to offer inflation protection. Policyholders may decide whether to buy the coverage.

Not sure? Have questions?

We understand it can be difficult to judge what group long term care disability insurance coverage may be right for your organization. That’s why we’re here to help. Simply call us at (732) 747-0411, or send us an email using the contact form on this page. We look forward to speaking with you.