Home » Blog » What You Should Know About Buying Long-Term Care Insurance

What You Should Know About Buying Long-Term Care Insurance

Many Americans pay into a long-term care insurance policy to help pay the costs of future custodial care. Premiums continue to spike, becoming unaffordable and affecting the policyholders’ quality of life. Here are important factors to know about when buying long-term care insurance.

long term care insurance

What is long-term care?

Unlike traditional medical care, long-term care requires prolonged support. Individuals living with a chronic illness, disability, or cognitive impairment, such as Alzheimer’s disease or dementia, benefit from long-term care. Services are varied and support people with the activities of daily living.

Examples of the ADLs include cooking, bathing, dressing, and transportation. Long-term care services provide assistance in these areas and more. Care may be received in a nursing home, an assisted living facility, a hospice unit, adult day care, or the comfort of home.

Is long-term care insurance expensive?

Yes, long-term care insurance is pricey. Policy premiums are based on the age at which an applicant applies. Costs also vary by gender, marital status, health condition, the insurer, and the policy chosen. Annual premiums, based on 2021 data, can range from near to over a thousand dollars.

For example, a single male who is 55 years old pays an annual premium of $950 for a policy valued at $165,000, while a 55-year-old female pays $1,500. The combined annual premium for a couple of the same age and for an equivalent policy valuation is $2,080.

How necessary is long-term care insurance?

The high premiums of long-term care insurance may be worth the expense. Consider the price of long-term care without insurance: $7,756 per month for a semi-private room in a nursing home, $4,576 per month for a home health aid, and $1,603 per month for an adult day center.

How do policyholders pay for long-term care?

Paying for long-term care can be done in numerous ways. Some individuals dip into personal savings. People who qualify use Medicare. Others rely on their long-term care insurance to pay for some or all of their long-term care expenses. Health insurance usually does not cover long-term care services.

When should someone buy long-term care insurance?

Several factors go into deciding to buy long-term care insurance. An applicant’s age should be assessed. Applying too late for a policy can cause higher premiums; conversely, buying early in life can lead to paying premiums for years before care is needed.

Assets and income should also be carefully weighed. People without the financial means to afford policy premiums are advised not to buy long-term care insurance. Those with significant assets who do not want to use them to pay for long-term care may want to buy a policy.

Health is another important factor—being in poor health can disqualify an applicant. Those who already receive long-term care may also not qualify for a policy, since most individual policies require medical underwriting. Some group policies, however, do not require medical underwriting.

Who offers long-term care insurance?

Individual long-term care insurance policies can be purchased through a private insurer. People in the workforce can buy group coverage through an employer. Federal and state employees, their families, and retirees have access to federal programs. A life insurance policy can also provide long-term care benefits.

What should applicants consider before applying?

Before signing up for a policy, it’s critical to compare rates, covered facilities, and limits on coverage from various insurers and agents. Ask the company about their rate increase history and whether they have raised the cost of their long-term care insurance policies.

Do long-term care insurance premiums increase?

Rates get higher with every birthday, since premiums correspond with age. For individuals in their 50s, each year they are hit with a 2 to 4 percent increase in their premiums. Once they reach their 60s, premiums spike to 6 to 8 percent for each year of age.

Individuals, primarily civilian federal employees and military members, who hold a policy with the Federal Long-Term Care Insurance Program can expect a major premium increase starting in 2024. Policyholders are forced to pay the higher costs to continue their policy or lose their investment.

How do applicants find a reputable carrier?

It’s important to find a reputable insurance company. Do not sign on until verifying with the state insurance department that the potential insurer is licensed to do business in the state. Check the insurer’s ratings at public libraries to evaluate the company’s financial stability.

Be cautious when receiving mailed advertisements that resemble official government documents and suggest Medicare’s involvement. Medicare does not sell or endorse long-term care insurance policies. Rather, verify authenticity by checking with the government agency identified in the piece of mail.


Contact Anderson + Wanca for help with Long Term Care Insurance

Once a policy is purchased, review the policy documents. Understand the contents, including whether the insurer contracted to not raise the premiums beyond a specific age. If you believe you are overcharged, contact the long-term care insurance attorneys at Anderson + Wanca.

Unexpected annual rate increases can make long-term care insurance unaffordable. Policyholders are encouraged to discuss their rate hikes with our experienced lawyers, who will review your policy terms. Premium hikes can be unlawful when the rates exceed the state’s regulations.

When a long-term care insurer continues to raise rates significantly, many policyholders may suffer the injustice. A large number of wronged individuals can make their case against the insurer by filing a class-action lawsuit. Anderson + Wanca will represent you and others who are affected.

Our class-action lawsuit attorneys successfully represent numerous individuals who experience exorbitant hikes in long-term care insurance premiums. We work on a contingency basis, meaning legal fees are only paid if we win the case—and we have an excellent track record in the courtroom.