Insurance for long-term care at home
The devastating impact of the coronavirus on residents in nursing homes and assisted-living facilities has reinforced a growing trend in the United States: the desire to remain at home for as long as possible in old age.
“We’re getting more calls,” says Jesse Slome, executive director of the American Association for Long Term Care Insurance. “The initial reports in all of the news on COVID-19 focused on nursing homes and the number of people infected and dying in those homes.”
That made people realize they wanted better options, like aging in place, he says.
When long-term care insurance first became widely available in the late
1970s, it was primarily used to help pay the costs of nursing homes. That has changed. Almost any policy sold now will have a pool of benefits that help pay for home care, a nursing home, assisted care, a memory unit or something similar, says Barbara Franklin, founder of Franklin & Associates, long-term care insurance brokers.
You can typically collect long-term care insurance — and stop paying your premiums — once you have a recognized cognitive impairment or can’t do two of six “activities of daily living,” such as bathing or dressing.
The nature of your benefits will depend on your contract, but here are a few provisions to look for in a long-term care policy with an eye toward aging at home.
Does the policy pay for informal caregiving?
Many policies won’t pay for caregivers unless they come through licensed agencies, which often require you to pay for a minimum of three to four hours of care a day, Franklin says.
But some policies cover non-licensed caregivers, such as family and friends, and in some cases nurses who offer in-home caregiving, says Vince Bodnar, a partner at Oliver Wyman, a management consulting firm.
This is more likely with a hybrid policy that combines long-term care and life insurance benefits. These hybrid insurance policies are typically two to three times more expensive than traditional long-term care insurance because of the death benefits.
Unlike those for traditional long-term care insurance, premiums for hybrid policies rarely increase, and if the longterm care benefits are never or only partially used, the policyholder’s beneficiaries will receive money back.
A third way to pay for long-term care is to buy a life insurance policy that allows you to use the money while you are still alive. This option is known as accelerated death benefits. Some companies offer this feature at no cost while others charge more for it. Keep in mind, though, that accelerated death benefits might only be triggered by a chronic or critical illness, not an inability to perform some daily living activities, Franklin says.
This is a complicated area of coverage, so be sure to consult an insurance agent who represents a number of different companies and can present a variety of options for you to compare.