Do long-term care (LTC) insurance policies cover medical and non-medical in-home care? Yes, they do.
But make sure you read the actual fine print. Not every long-term care insurance policy covers home health care, and even if yours does, it may not cover it in the way you hope.
There’s a lot of nuance when it comes to a long-term care insurance policy, and how each works generally depends on the insurance company you’re working with.
[READ: How to Set Up Home Health Care After a Hospital Stay]
What Does Long Term Care Insurance Cover for Home Health Care?
Broadly speaking, long-term care insurance pays for somebody, such as a home health aide, to to help take care of a senior. In other words, if you or a loved one was unable to do day-to-day activities like bathing or feeding yourself, long-term care insurance would pay for someone to help you (or a loved one) do that. While most people probably think of it as long-term care insurance covering care in a nursing home, assisted-living or in an adult daycare, long-term care insurance does (often) pay for home health care too.
In a home setting, this can include:
— Skilled in-home nursing care
— Occupational, speech physical and rehabilitation therapy
— Help with the six defined activities of daily living like dressing, bathing, toileting and eating/feeding yourself
— Respite care that provides temporary care at a home, adult day care or nursing home. It’s meant to relieve a primary caregiver of responsibilities for a span of a few weeks per year.
— Some policies may also include homemaker services like meal preparation and house cleaning services.
— A few long-term care insurance policies also cover short-term hospice care. But since Medicare usually covers this, it’s not often covered by long-term care insurance.
“Long-term care insurance covers care at home from a licensed home care agency or in some cases a non-licensed person if the policy is cash indemnity,” says Brian Gordon, president of Gordon Associates Long-Term Care Planning, a family-owned insurance firm in Bannockburn, Illinois. (Cash indemnity is an insurance payout that provides a fixed, predetermined sum of money to a policyholder when a covered event occurs.)
“Home is where most people want to be and where most people receive care,” Gordon says. But he adds that an LTC insurance policy is portable, and that you can live anywhere in the United States with one and be just about everywhere, whether it’s your home, an assisted living facility, a nursing home or hospice.
“As soon as you need help doing any two of the activities of daily living, you should be turning to your policy for assistance,” adds Patrick Simasko, an elder law attorney and financial advisor at Simasko Law in Mount Clemens, Michigan.
[SEE: How Life Insurance Can Pay for Long-Term Care]
How Does Long-Term Care Insurance Work?
Long term care insurance works like any insurance product. You pay monthly premiums, and at some point, if you need to make a claim, you do. Generally, if you stop making those premiums, you lose the coverage, and if you’re lucky enough to live to a ripe old age and not need help with daily living activities, then the insurance company keeps your money.
“If your policy isn’t set up to cover your spouse once you pass away, then any money not used when you die is gone,” says Simasko. “There are no beneficiaries for these policies.”
As noted, if you don’t use the policy, you lose the money you paid. According to the American Association for Long-Term Care Insurance, the average annual premium for an LTC insurance policy — if you’re a 55-year-old male — is $950 a year ($1,500 for a 55-year-old female). That women are so much more expensive is likely due to the fact that, on average, they live longer than men, and so they’ll probably have longer-term care longer than a man. On average, women live to be 81.1 years of age, compared to 75.8 years of age for men, according to the National Center for Health Statistics.
That money adds up and is a lot to spend if you don’t end up using the policy; you may feel you’re better off just saving a lot of money for long-term care.
[READ: Understanding the Different Roles of In-Home Care Providers]
What Are the Limitations of Long Term Care Insurance for Home Health Care?
It’s important you check your policy carefully, says Simasko.
“Many of these policies don’t kick-in until the individual is in a nursing home where they need assistance bathing, dressing, eating or using the restroom,” Simasko says.
In other words, that’s a problem if you plan on trying to age at home, and you’d like long-term care help precisely so you don’t have to go to a nursing home. So you should be certain that your plan does pay for a home health aide or any other medical professional to treat you at your home.
Eligibility and timing
If you have a long-term care insurance policy and are preparing to claim benefits, the first step often involves an in-home assessment, usually by a home health nurse or trained assessor. This crucial evaluation helps the insurance company determine your eligibility and the specific type of care and assistance you require.
The assessor focuses on evaluating your ability to perform the standard activities of daily living and checking for signs of severe cognitive impairment (SCI). Most policies require that you need substantial assistance with a certain number of ADLs (usually two or more) or have an SCI to trigger benefits.
Timing matters. If you have long-term care insurance, you may hope to use it before you actually are eligible to. That is, the insurance company may determine you’re too healthy to file a claim.
Often, Gordon says, people think they’re ready for long-term care help the moment they can’t drive and they could use a ride to the doctor or the salon, but that’s not enough to justify filing a claim, and it would be denied. But if you had trouble walking from the car to the doctor’s office and understanding what the doctor is telling you, you would have a good case for filing a claim.
But while some people want to file too early, plenty of people hold off filing claims for home health aides until they’re practically ready for a nursing home, and you don’t want to do that either.
That happens too often, according to Simasko.
Waiting period
As noted, all policies are different, and so you really don’t want to make assumptions about coverage, says Ryan McEniff, the owner of Minute Women Home Care in Lexington, Massachusetts (Minute Women is a play on Minutemen, from the American Revolution; it’s a family-owned business that has been around since 1969).
McEniff says that it’s important to really understand the policy, so your expectations are in check and there are no unpleasant surprises.
“Most policies have a 90-day elimination period, in which the family pays out of pocket for those 90 days, then the policy benefits will activate and start reimbursing for care. Policies can be different, so make sure you know your elimination period,” he says.
Payout vs. reimbursement
While some companies will offer a cash benefit, most policies reimburse the insured after they paid for the care. If cash flow or savings is an issue, be sure to check how the insurance company pays for home care expenses.
Daily and monthly benefit limits
Moreover, it isn’t as if your policy will kick in, and you’ve got unlimited free help. McEniff says you’ll want to know what your policy’s maximum daily and monthly benefits are.
“Often the maximum daily benefit pays a portion but not all of the costs for care. So some care may still be out of pocket,” he says.
According to the 2024 Cost of Care Survey conducted by Genworth and CareScout, on average, you’ll pay $6,292 a month (44 hours a week) for homemaker services (which are non-medical services) and $6,483 (44 hours a week) for a home health aide, and they can do help with medical issues, such as giving medicine or helping with bathing. So if your daily maximum for a policy is $200, but you’re paying $300 a day for help, then you’ll pay that extra $100 out of pocket.
Also, keep in mind that your long-term care benefits can eventually run out. Most policies have a benefit cap, whether it’s a maximum payout amount or benefit duration.
That’s probably why a lot of people hold off on filing a claim. Typically, your long-term care insurance policy money won’t last the rest of your life, but it’ll be a certain amount that you’re covered. These typically range from $165,00 to $250,000. And then once that money is spent, you’re on your own.
But one big upside of using long-term care insurance at your home is that the costs of a home health care aide tend to be far less than that of a nursing home. The annual median cost of a home health aide (44 hours a week) is $77,792 a year, according to the 2024 Cost of Care Survey conducted by Genworth and CareScout. The cost of a private room in a nursing home is $127,750. (That’s not a perfect comparison, of course, since an long-term care insurance policy doesn’t always cover room and board at a nursing home, but the larger point is that it’s cheaper to get care at your own home over a nursing home, and so long-term care policy payout takes longer to run out).
[READ: Using VA Benefits to Pay for Long-Term Care.]
6 Tips for People Using Long-Term Care Insurance for Home Health Care
There are a few rules of the road to consider if you’re thinking of buying an LTC insurance policy:
1. Make sure your long-term care policy covers care in the home.
We mentioned that earlier, but it certainly is important, if you want to age in place. Some policies may limit the types of care covered and where it can take place, while others provide a more comprehensive range of services.
2. Understand the elimination period.
As noted, it’s not uncommon for long-term care insurance policies to have elimination periods, also often called waiting periods. That period is where you are self-funding your care until you start receiving payment for services. This waiting period can range widely, but the most common is 90 days.
It can get tricky, though. You’ll want to understand whether the elimination period is measured in calendar days or service days. If it’s calendar days, it’s simple. You pay for a home health aide or homemaking service on June 1, for instance, and 90 days later, your insurance kicks in and starts paying for care.
Unfortunately, that’s not all that common. Many policies count service days, so if you only have a home health aide visiting three times a week, your long-term care insurance policy won’t kick in until you’ve paid for 90 service days. Really, you’re not losing money that way, but it can be sticker shock for people who think they’re going to be paying for three days a week for three months when in actuality, they will be paying for 90 home health aide visits.
3. See who is compensated.
Your policy may allow family members to be paid for care they give a senior. Or it may place restrictions on the type of caregivers covered. For example, it may only cover licensed professionals.
4. Check to see if home modifications can be paid for.
That is, if you want to add a wheelchair ramp or rehaul your bathtub to make it easier and safer to get into, will your policy pay for that. That may not be a deal breaker to you, but many plans cover home modifications, and there may come in time in your life when you really would appreciate your insurance paying for a stairlift, for instance. Right now, you can expect to spend about $2,500 to $8,000 on a stair lift, according to the National Council on Aging.
5. If a claim is filed for a loved one, be present when the insurer shows up.
If you file a long-term care insurance claim for a loved one, make sure you’re involved. The results of the home visit directly determine the scope of assistance that the insurance policy will cover.
“Make sure someone is there advocating for the beneficiary,” McEniff says. “Seniors can self-sabotage by claiming they don’t need assistance, can dress themself and are continent because of memory issues or pride. This can lead to a denied claim.”
6. Consider a hybrid plan.
Hybrid policies combine long-term care coverage with another financial product, usually life insurance. These have become popular because they offer more flexibility than traditional long-term care plans. If you pass away without using the long-term care portion, your beneficiaries receive a life insurance death benefit. Many of these policies also allow you to surrender the policy and receive a cash value, and the premiums are typically guaranteed not to change.
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Does Long-Term Care Insurance Cover Home Health Care? originally appeared on usnews.com
