Long-term care refers to a wide array of medical care, personal assistance and social support services for people who are physically or mentally unable to independently care for themselves over an extended period of time. According to the Health Insurance Association of America, the average age at which people purchase long-term care insurance is 62. However, it is important to note that purchasing a policy at a younger age typically means policies’ premiums are much more affordable. While you may pay for a longer period of time, taking out a policy around age 50 allows you to enjoy the peace of mind in knowing that you are covered. This often evens out the cost of coverage over the life of the policy, as compared to a policy taken out over the age of 65.
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 policy holder in the same way. Unlike a medical policy that will cover a limited number of days of recuperative time, a long-term policy will cover two years or more. Beyond that, disability insurance replaces only salary at the time of the injury, and not the care. The policyholder will then have to pay out-of-pocket for any ongoing long-term care due to an accident or injury. In addition, Medicare should not be considered a resource for handling any substantial long-term care expenses. This program reimburses the insured for a maximum of 100 days, with the average repayment of expenses being a mere 28 days.
A long-term care insurance policy covers any or all of the following types of services: nursing home care, assisted living care, adult day service, home health care and personal care.
Most 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.
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