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 a group policy through an employer or through
membership in an association. 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, companies, and agents to get the coverage that
best fits you needs.
Policies From Your
Employer
Your employer may offer a group long-term care
insurance plan. The employer-group plan may be similar to what you could buy in
an individual policy. One advantage of an employer-group plan is you may not
have to meet any medical requirements to get a policy. 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.
Insurance companies may let you keep your coverage
after your employment ends or your employer cancels the group plan. You may 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 can't find if you buy a policy on your own.
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. Like employer-group policies,
association policies usually give their members a choice of benefit options.
Policies sold through associations usually let members keep 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 (CRRC)
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.
Partnership Programs
Some states have long-term care insurance programs
designed to help people with the financial impact of spending down to meet
Medicaid eligibility standards. These programs, usually called "partnerships,"
let you buy certain long-term care insurance policies from insurance companies.
You then have full or partial protection against the normal Medicaid requirement
to spend down your assets to become eligible.
Check with your state insurance department or
counseling program to see if partnership policies are available in your state.
Please keep in mind that partnership programs have specific requirements in each
state in which they are offered.
Life Insurance Policies
Some companies let you use your life insurance
death benefit and cash value to pay for specific conditions such as terminal
illness, for permanent confinement in a nursing home, or for long-term care
expenses. 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. Policies may pay part or all of the death benefit for 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.
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.
Pooled Benefits
You may be able to buy a long-term care insurance
policy that covers more then just one person or more than one kind of long-term
care service. The benefits provided by these policies are often called "pooled
benefits."
One type of pooled benefit covers more than one
person, such as a husband and wife, or two partners, or two or more related
adults. This pooled benefit usually has a total benefit that applies to all of
the individuals covered by the policy. If one of the covered individuals
collects benefits, that amount is subtracted from the total policy benefit. For
example, if a husband and wife have a policy that provides $150,000 in total
long-term care benefits, and the husband uses $25,000 in benefits from the
policy, $125,000 would be left to pay benefits for either the husband or the
wife, or both.
Another kind of "pooled benefit" provides a total
dollar amount that can be used for various long-term care services. These
policies pay a daily, weekly, or monthly dollar limit for one or more covered
services. You can combine benefits in ways that best meet your needs. This gives
you more control over how your benefits are spent. For example, you may choose
to combine the benefit for home care with the benefit for community-based care
instead of using the nursing home benefit.
Some policies provide both types of pooled
benefits. Other policies provide one or the other.