Long-term care insurance can pay for in-home care depending on the policy and the home care company. Many families consider long-term care insurance as they plan for future care needs, especially for in-home care and assisted living. Home care, or custodial or personal care, is not covered by Medicare and is covered only in certain circumstances by Medicaid.
The types and options for long-term care insurance have changed dramatically over the years, and families often need to know whether long-term care insurance will pay for in-home care, especially given that most people state they want to age at home.
Much of the change in the industry is due to high premiums, challenges in meeting coverage criteria, and many insurance companies getting out of the business altogether due to high costs. For some families, purchasing long-term care insurance for in-home care or other covered services makes sense, but for others, it may not. The first step is understanding your options, costs, and qualifying criteria.
Understanding Long-Term Care Insurance
Long-term care insurance provides financial support for long-term care needs such as in-home care, assisted living, memory care, and nursing homes.
What is Long-Term Care Insurance?
Current options for Long-term care insurance may be more appealing than they used to be due to the availability of more flexible policies. Most companies have stopped offering stand-alone (traditional long-term care policies) due to:
- Increasing premiums and no option to recoup any portion of the premiums if the benefit goes unused
- Benefit payouts that did not cover the rising cost of care.
- The challenge of meeting the criteria to qualify for benefit payouts
Traditional or Stand-Alone Long Term Care Policies
Although stand-alone policies are less available or popular than they once were, you can still find them. Traditional long-term care insurance policies are relatively simple.
- You pay a monthly premium that goes up each month.
- There is a predefined lifetime benefit amount.
- Most policies cover assisted living, in-home care, memory care, and nursing home care.
- Each policy has a per-day maximum rate that they pay out.
- If you stop paying premiums, you usually lose coverage
- There is usually a 30- or 90-day waiting period before benefits begin.
- To qualify for benefits, the patient must be unable to perform two or more of the six activities of daily living (ADLs).
- There is typically no option to recoup any remaining benefits or assign them to another individual.
Hybrid Long-Term Care Insurance Policies
Hybrid policies, also called linked-benefit long-term care insurance policies, have outsold traditional policies since 2010. Here are their characteristics:
- Hybrid policies link to your traditional life insurance policy or an annuity.
- You can pay a monthly premium or a lump sum, eliminating increasing premiums.
- You benefit from long-term care coverage and life insurance benefits that go to your heirs if you don’t use the long-term care benefit.
- Depending on the policy, you can cancel and get some return on your investment (surrender value).
- You must still meet the criteria to apply for the long-term care benefit.
- Hybrid policies can be more expensive than traditional long-term care policies, but many offer a fixed premium.
Long Term Care Insurance Rider with a Life Insurance Policy
A long-term care rider is an additional benefit you can add to your existing life insurance policy. A rider is simply an amendment to your policy that provides payouts should you need long-term care.
- You can access a portion of the policy death benefit to pay for long-term care expenses.
- If you use the long-term care benefit, your life insurance death policy benefit will be reduced.
- If you do not use the long-term care benefit, your heirs will receive the entire death benefit.
- You must meet medical certification of inability to perform ADLs.
Who Typically Needs Long-Term Care Insurance?
There is no one-size-fits-all or one answer for everyone who is considering long-term care insurance. Some factors to consider when deciding:
- People with significant assets may consider long-term care insurance. They can afford the premiums and benefit from protection against high care costs.
- People with no family and the ability to pay for long-term care insurance may need it.
- People getting older but not yet into their 80s or 90s may need long-term care insurance. Waiting until you are older can increase the cost.
- People with chronic medical conditions or dementia may need long-term care insurance to help pay for expected care. However, some policies may consider pre-existing conditions when determining premiums.
Does Long-Term Care Insurance Cover In-Home Care for Older Adults?
Most long-term care insurance policies will pay for in-home care. Before choosing a policy, ensure that the type of in-home care you want will be covered and the daily rate.
Type of In-Home Care Typically Covered
The type of in-home care typically covered will depend on your policy, but in general, you will want to consider these factors:
Agency vs. non-agency
Some policies may require using an established home care agency rather than an individual hired outside an agency, such as a family member. Policies may require that the care provider be licensed or certified. Check on your policy caregiver qualification requirements.
Specific covered services
You may want to review the typically covered services, which usually include:
- Companionship to reduce loneliness and engage in preferred activities (companionship services may not be covered under specific policies.
- Assistance with bathing, dressing, grooming, and toileting
- Shopping and cooking
- Assistance with mobility and transfers
- Medication pick-up at the pharmacy.
In-Home Care Services Typically Not Covered
When most people think of in-home care, they assume that any type of care that someone needs is covered. Almost all long-term care insurance policies have exclusions and restrictions on services.
Here are a few:
- Medical care. Skilled nursing, physical, and/or occupational therapy are not covered under home care. Even injections or diabetic or blood pressure checks may not be permitted. Those services are Medicare-authorized treatments ordered by a physician.
- Medication administration. Most states prohibit home care workers from administering medications directly to a patient. In some cases, the in-home staff may unpackage medications, but a nurse is required to set them up and distribute them.
- Home maintenance and housekeeping. Typically, in-home services do not cover laundry, home repairs, or activities such as snow shoveling or lawn care.
- Transportation. Transportation to appointments or other activities may not be covered.
How to Use Long-Term Care Insurance for In-Care for Older Adults
Each policy will have a different method to apply for and qualify for benefits coverage through a long-term care policy.
Steps for Verifying Coverage
Here are the typical steps for verifying coverage:
Review your policy to understand the coverage, exclusions, and covered services criteria.
Contact customer service and have your insurance policy number handy. Verify that you have current coverage.
Verify any exclusions and the criteria for qualifying for coverage. Remember that you will likely have a waiting period where you may have to pay out of pocket until the waiting period is over.
Filing a Claim
Filing a claim can be stressful. Being well-prepared will increase your chances of being approved for coverage. Here are the typical steps for filing a claim:
Ask about the claim process. Often the claim forms can be found on the insurance company's website. However, call customer service and request that they email or mail the appropriate forms.
Gather documentation. Documentation supporting your need for care is critically important. You may need a physician’s statement and detailed notes from the care agency providing you care.
Ensure accurate information. Take your time in making sure that all of the demographic and personal information you give is correct. One small error may trigger the rejection of your claim.
Keep copies of the claim. Keep copies of your claim in case they are lost.
Confirm Receipt. Confirm that the company received your claim and ask about the timeline for a response.
What Happens If a Claim Is Denied?
A denial of your claim doesn’t mean that you don’t have options. Consider taking these steps:
- Understand the reason. Read the denial letter so you understand specifically why your claim was denied. Compare the reasons for denial with your policy terms to see if the denial is justified.
- Re-submit the claim. If there was an error on your part, gather the missing documentation and resubmit the claim.
- Call the insurance company for clarification. If you need clarification about why your claim was denied, call and ask for additional information.
- File an appeal. File an appeal if you feel the denial was unjustified. Check on any deadline for submitting the appeal.
- File a complaint. Suppose you feel the denial was unjustified and aren’t satisfied with the insurance company's response. In that case, you can file a complaint with your state insurance department or contact consumer advocacy groups like AARP or the American Association for Long-Term Care Insurance.
Tips for Maximizing Your Long-Term Care Insurance Coverage for Senior In-Home Care
As with any insurance policy, you should consider reviewing your long-term care coverage.
Review Your Policy and Make Updates
Life circumstances change, and reviewing your long-term care policy has several advantages. Think about the following:
- Assess your financial situation. Depending on the type of policy you have, if paying premiums is a hardship, you may consider canceling it. You may want to talk with your financial advisor before making any significant changes.
- Updating coverage. You can increase or decrease your coverage based on your health status.
Get Professional Advice
Before deciding whether a long-term care insurance policy is right for you, talk with experts in the field, including, but not limited to:
- Financial advisors. Financial advisors can assess your complete financial picture, including assets, income, and expenses, to help you decide whether a long-term care insurance policy makes sense.
- Geriatric care managers. Geriatric care managers can assess your current living and medical situation and make recommendations. These professionals understand the costs of care, and although they may not advise you on whether you should purchase a policy, they can offer advice on future care needs.
Alternatives to Long-Term Care Insurance
Many choose not to buy long-term care insurance and rely on other resources.
Medicare and Medicaid
Medicare does not pay for in-home care but does provide time-limited home health care, which can help provide some assistance. Medicaid may offer in-home care if you meet specific criteria.
Private Pay and Other Financial Assistance
For families with ample financial resources, paying privately for in-home care may be the best option.
For others who can’t afford long-term care insurance, other financial mechanisms, such as reverse mortgages or home equity lines of credit, might help. Veterans and their spouses may be eligible for financial help through the Veterans Administration.
Long Term Care Insurance and In-Home Care
Long-term care insurance can be a lifeline for many families needing in-home care. Consider your options carefully to make a wise choice.
This article was reviewed and fact-checked by Megan Jones, MSW, LSWAIC.
Sources
Home Health Services. Medicare. (n.d.). https://www.medicare.gov/coverage/home-health-services
Rau, J., & Aleccia, J. (2023, November 22). Why long-term care insurance falls short for so many. The New York Times. https://www.nytimes.com/2023/11/22/health/long-term-care-insurance.html
(N.d.-b). https://crsreports.congress.gov/product/pdf/IF/IF11614
https://crsreports.congress.gov/product/pdf/IF/IF11614
Understanding long-term care insurance. AARP. https://www.aarp.org/caregiving/financial-legal/info-2021/understanding-long-term-care-insurance.html
Home Health Services. Medicare. https://www.medicare.gov/coverage/home-health-services
Helping Americans obtain the Medicaid Long Term Care they require. Medicaid Planning Assistance. (n.d.). https://www.medicaidplanningassistance.org/https://www.medicaidplanningassistance.org/
Veterans Affairs. Go to VA.gov. (2013, May 2). https://www.va.gov/GERIATRICS/pages/Paying_for_Long_Term_Care.asp
