When it’s time to consider moving into a senior living community, the decision comes with mixed emotions and challenging logistics. Chief among the concerns: how to pay for it all. While personal savings, retirement funds, and Social Security can be helpful, using long-term care insurance can help – in some instances.
The goal of a long-term care insurance policy is to provide financial assistance to policyholders who later need long-term care. These policies have evolved since they were first introduced.
“Before 2010, LTC policies were largely traditional, with a ‘use-it-or-lose-it’ approach,” financial planner Derek Miser wrote for Kiplinger magazine. “Today, new product structures such as asset-based solutions and return-of-premium policies are available, offering flexibility, financial protection and even opportunities to fund long-term care with qualified retirement funds.”
These include hybrid policies that “also offer a return-of-premium feature or a death benefit if long-term care is not required,” Miser wrote. Unlike older LTC policies, premiums are typically fixed, which is especially beneficial to retirees on a fixed income.
Some policies also offer shared spousal benefits, allowing a surviving spouse to use unused benefits.
Using long-term care insurance: benefits begin with ADLs
Long-term care insurance doesn’t kick in simply because someone moves into a senior community. These policies generally activate only when assistance with the Activities of Daily Living (ADLs) is required – things like bathing, dressing, eating, toileting, transferring (e.g., moving from bed to chair), and maintaining continence.
That means for independent living or active lifestyle residents, the policy may not be used right away. But when care needs increase, the benefits can make a vital difference.
What does long-term care insurance typically cover?
Coverage can vary by policy, but most pay for services such as:
- In-home care
- Assisted living facility care
- Memory care
- Skilled nursing care
- Adult day care services
- Hospice care
Some policies may cover home modifications, respite care, or caregiver training.
Understanding the elimination period
“Frequently these plans carry an “Elimination Period” where you are required to pay for your senior living costs up front for 30, 60, 90 days or more, and only then do the benefits start,” says Elias Papasavvas, founder and CEO of Second Act Financial Services. His business focuses on helping older adults meet their financial goals.
Make sure you know your policy’s elimination period and whether it’s calendar days or service days. This can impact how soon reimbursements begin.
Maximizing your long-term care insurance benefits
Here are a few ways to make the most of using long-term care insurance:
- Coordinate with community staff: Senior living administrators are often experienced in helping families activate and use policies, including assisting in documentation and benefit verification.
- Get a doctor’s evaluation: Most insurance providers require a medical assessment to confirm the need for assistance with ADLs.
- Track services and costs carefully: Maintain clear records of care received, dates of service, and invoices.
- Consult a professional: A financial planner or elder law attorney can help navigate benefits, especially when integrating with Medicaid or other resources.
“Long-term care insurance policies can be rather long and detailed. To get the most out of your policy, it’s necessary to understand what your policy covers, as well as other benefits and stipulations,” affirms Papasavvas. “Some policy claims may be denied if you don’t meet the insurance company’s stringent requirements. Working with knowledgeable professionals specializing in filing claims can save you dozens of hours of phone, email, and correspondence time.”
Related: Long-Term Care Insurance Is Now More Flexible
Don’t overlook an old policy
A long-term care insurance policy purchased decades ago might have faded from memory. Policies could have been tucked away in a file drawer, and many adult children aren’t even aware they exist. Finding one of these policies could significantly ease the financial burden of long-term care.
This is why it’s important to review policies regularly, inform trusted family members or caregivers of the policy’s existence, and understand its conditions and limitations.
A long-term care insurance policy, quietly waiting in a file cabinet, may become a lifeline when the time comes. Whether for yourself or a loved one, take time to look into old benefits. In today’s world of rising senior care costs, every tool counts.
And perhaps more than anything, asking the right questions today, before the need becomes urgent, can provide peace of mind for tomorrow.
Learn more about care levels in retirement communities here on SeniorsGuide.com.