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When Is the Best Time to Buy Long Term Care Insurance?

Mass Media

long-term careThe market for long-term care services is currently underserved. It’s estimated that 12 million Americans need long-term care. Yet, only around 8 million people receive these services in the US each year.

One of the most significant barriers to people who need long-term care services but don’t utilize them is cost. Luckily, long-term care insurance can help reduce the price of these services in the long run.

Nearly 45% of people receiving long-term care services have Medicaid or Medicare coverage. But only 18% have long-term care insurance from a provider. This is most likely due to a lack of understanding, and that’s why we created this guide.

Are you curious about long-term care insurance and how to save on your policy? Then keep reading because this one’s for you.

What is Long-Term Care Insurance?

Traditional insurance plans like Medicare and Medicaid don’t cover all the services you need as you age. Whether you’re at home or in a retirement facility, you’ll have to cover the costs if you need help with eating, dressing, or bathing.

That’s why many elderly individuals choose to purchase a long-term care insurance policy.

Long-term care insurance reimburses policyholders for personal and custodial care. You’ll get reimbursed for a limited amount of services. But you can customize your policy to include the benefits you need.

Plus, long-term care insurance is applicable to a wide variety of settings. That means you’ll be covered whether you’re in a nursing home, at an assisted living facility, or receiving care from the comfort of your own home.

Here’s what else you need to know about long-term care insurance.

Who Qualifies for Long-Term Care Insurance?

Unfortunately, individuals already living in a long-term care facility are ineligible for insurance. Individuals in significantly poor health may also bar you from insurance or it could mean you have a higher policy rate.

Otherwise, eligibility for long-term care insurance hinges on two criteria. The first is the Benefit Trigger. The second is the Elimination Period.

The company providing your long-term care insurance will require a nurse or social worker to determine if you qualify for benefits. While the criteria vary by company, you’ll likely be evaluated based on the level of cognitive impairment and ADLs.

ADLs are also known as Activities of Daily Living, which includes bathing, dressing, eating, toileting, and more. Most companies require you to need help with at least two of the nine ADLs or have a significant cognitive impairment to qualify for benefits.

The second requirement — the Elimination Period — refers to the time that passes between when the Benefit Trigger occurs and when you start receiving reimbursements for long-term care services. Think of it as a deductible.

Most companies allow policyholders to choose the duration of their Elimination Period. Often, it will be a period of 30 to 90 days. You’ll have to pay all your long-term care services out of pocket until the Elimination Period is up.

How Long Will Long-Term Care Insurance Cover You?

Few long-term insurance providers offer unlimited benefits for policyholders. More commonly, providers put limits on how many services they’ll cover. Some companies limit the amount they’ll pay while others limit how long they’ll pay.

In rare cases, you can find companies that do offer unlimited benefits. These providers will pay for an unlimited amount of benefits for as long as you live. Again, though, these policies are few and far between.

Why Timing Matters for the Cost of Long-Term Care Insurance

Of course, the cost of long-term care insurance is directly related to which benefits you choose. Some companies will raise your benefit premiums based on inflation or other reasons. That’s why it’s always best to ask the insurance provider for its rate history before you apply.

Yet, often more important to the total cost of your long-term care insurance is how old you are when you buy it. If you buy insurance too late in the game, you’ll have to pay much higher premiums. But buying insurance too early may mean you pay a higher total cost over time.

For example, imagine if you waited to buy insurance until age 70. Your monthly premium would have to be $516 to hit a total of $55,768 worth of covered benefits by age 79. But if you purchase your premium at age 50, you can pay only $205 per month to hit a total of $71,285 worth of covered benefits by age 79.

When is the Right Time to Buy Long-Term Care Insurance?

According to experts, the best time to buy long-term care insurance is between the ages of 60 and 65. That way, you can optimize your savings on monthly premiums while also saving enough to cover your needs.

Using the above example, let’s analyze how your premiums and total covered benefits would look if you buy your plan at ages 60 and 65.

65-year-olds paying $338 per month in premiums would save a total of $56,821 by age 79. 60-year-olds would see even lower monthly premiums of $261. Yet, you’d save a total of $59,607 by age 79.

Of course, you have to weigh these cost savings against the possibility that your health may decline before age 60. As we’ve mentioned, many long-term care insurance providers won’t cover applicants with significantly poor health.

So, how do you know for sure when to buy long-term care insurance? A long-term care planning legal advisor at Rhodes Law Firm can look at your unique situation and help you decide when is the best time to make the purchase.

Let Rhodes Law Firm Help You With Long Term Care Planning

Finding the right long-term care insurance policy is critical for those who don’t want to pay out of pocket for post-retirement services. And buying your policy at the right time will determine the total cost you pay for coverage.

Do you need help with long-term care planning tasks like deciding on a long-term care insurance policy? You’ve come to the right place. Get in touch with Rhodes Law Firm today to find out how we can lend you a hand.

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