Best Long-term Care Insurance Companies

Long-term care insurance covers expenses for personal or custodial care in your home or another care setting, such as an adult day care center, an assisted living facility, a memory care community or a nursing home. Long-term care insurance can also pay for home modifications, such as wheelchair ramps and safety grab bars. Care coordination services are included in some of the best long-term care insurance policies.

What does long-term care insurance not cover?

Long-term care insurance is not intended to cover medical expenses or care for preexisting conditions, including heart disease, cancer, diabetes and some mental disorders. Most long-term care policies also exclude coverage for long-term illness or injuries caused by things like alcoholism, drug abuse, self-inflicted wounds or mental disorders.

Long-term care insurance probably won’t cover your phone, cable or internet bill if you are in an assisted living facility or nursing home. Additionally, long-term care insurance doesn’t cover in-home care provided by a family member.

» MORE: Assisted living vs. nursing home vs. home care

Government policies like Medicare and Medicaid only cover long-term care services in very specific situations, so older adults and families on tight budgets often have to pay for daily care services out of pocket.

“Long-term care insurance helps pay for medical and personal care expenses such as skilled nursing, home health aides, assisted living facilities, adult day services and other long-term services and supports,” said Evan Tunis, president of Florida Healthcare Insurance. “It is designed to help cover the costs of services you may not be able to pay out of pocket.”

Tunis explained that when you sign up for a long-term care policy, you will pay premiums for a set period of time. Once you are eligible, the company will then pay for your long-term care services.

“The amount of money paid out depends on the terms and conditions outlined in your policy,” he said.

Expect an “elimination period,” which is often a 30- to 90-day gap between when you start paying and when your insurance policy begins reimbursing your costs. This waiting period starts once you meet the criteria for starting to receive benefits. Costs during the elimination period must be paid out of pocket.

» MORE: Does Medicare pay for nursing homes?

The time to sign up for long-term care insurance is between ages 50 and 65, before health issues arise. Expect the application process for long-term care insurance to take about four to six weeks to complete the underwriting process.

Follow these steps to apply for long-term care insurance:

• Research and compare: Before you purchase, research and compare different insurance policies and providers to find one that is the best fit for your needs. Consider factors such as the services covered, the cost of the policy and the reputation of the insurance provider.
• Determine eligibility: Long-term care insurance generally requires that you be in good health at the time of application. Most insurance providers will require that you complete a health questionnaire or undergo a medical exam to determine your eligibility for coverage.
• Choose coverage options: Once you have determined the insurance policies that you are eligible for, choose the coverage options that best meet your anticipated needs. Consider factors such as the daily benefit amount, the benefit period and the elimination period.
• Underwriting process: Once you have submitted your application, the insurance provider will begin the underwriting process. This process involves reviewing your medical history and evaluating your risk of needing long-term care services. The insurer may request additional information or medical tests to provide an accurate assessment.
• Approval: If you are approved for long-term care insurance, you will need to pay the premium for the policy to be activated. Now is the time to review your policy to ensure it meets your expectations. The premium will depend on the policy coverage options that you have chosen and your health status.

Long-term care insurance costs vary widely, from $1,000 to over $7,000 annually. Factors influencing the price include the applicant's age, gender, health, coverage amount and location. Couples can get a discounted rate with a shared policy.

Most long-term care insurance companies offer monthly payment options, but you may get a better deal by paying for the year upfront. Long-term insurance policy options are sometimes “guaranteed renewable,” meaning the insurance company cannot cancel your policy. The company can, however, raise your premiums as part of long-term care insurance rate increases for a class of policies.

Tax advantages

Tax benefits help offset long-term care insurance costs. Premiums can often be deducted as medical expenses on federal income tax returns, depending on age thresholds. Business owners and those using pre-tax health savings account (HSA) dollars can enjoy additional tax advantages.

» MORE: Average cost of long-term care insurance

Long-term care insurance is not your only option for covering daily care needs when you are older. Here are some other options:

• Self-insurance: If you have significant savings, you could earmark a portion of your assets for potential long-term care needs. This method requires discipline and a good understanding of potential care costs.
• Life insurance with a long-term care rider: Some life insurance policies allow you to add a rider for long-term care. This means part of the death benefit can be used for care during your lifetime.
• Annuities with long-term care options: Certain types of annuities allow for increased payouts if the policyholder needs long-term care. These products often require a large upfront investment.
• Reverse mortgages: If you own your home outright or have substantial equity, a reverse mortgage can provide income that can be used for long-term care expenses.

» CALCULATE: What is the cost of in-home care?