Long-Term Care Insurance Helping Avoid Nursing Homes

People with long-term care insurance are receiving a majority of their benefits outside a nursing home according to a new study from the American Association for Long-Term Care Insurance.

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Long-Term Care Insurance Helping Avoid Nursing Homes
6 Min Read February 28th, 2017 Updated:June 9th, 2021

Nobody wants to go to a nursing home, and a recent study completed by the American Association for Long-Term Care Insurance shows people with LTC insurance can stay in their own homes. Most newly opened Long-Term Care Insurance claims begin at home, according to data reported by the AALTCI, a national consumer education and advocacy group.

The report shows 70% of new Long-Term Care Insurance claims start with in-home care, up from the last study, which was 52%. What is also nice for most policyholders and their families is they were able to avoid a facility as they received quality in-home care. Most claims ended with the policyholder still being at home.

Adult day care centers and assisted living facilities are still growing as the use of nursing homes declining. 

"Most long-term care insurance claims begin and end in the home."

 Jesse Slome, executive director of the AALTCI.  

The AALTCI analysis of claims found that nearly 56 percent of claims also ended in the home.

"People want to be in their home with family and loved ones and having some long-term care insurance in place can help pay for the cost of home care services."

Jesse Slome 

Many people think of long-term care as being nursing home care. The fact is a recent Boston College study confirmed that nursing home stays were much shorter now than in the past. Many experts cite the availability of assisted living, adult daycare, and homecare as reasons why fewer people need nursing homes. 

The AALTCI study confirms that for people with insurance, they can avoid a nursing home. In fact, some experts call LTC insurance as nursing home avoidance protection.

"Individuals continue to mistakenly think of long-term care insurance as nursing home insurance," explains Jesse Slome. "I sometimes refer to LTC insurance as nursing home avoidance insurance because often having this insurance protection in place allows the individual to be cared for in their own home."

Jesse Slome 

In 2020, American families received over $11.6 Billion in Long-Term Care Insurance benefits. An LTC Insurance policy helps families protect their savings, reduce stress and burden on family members and give them a choice of quality care in the setting they desire. 

Most people purchase Long-Term Care Insurance in their 40s and 50s to take advantage of low premiums. Often, because of better health, consumers can receive preferred healthy discounts as well. This advance planning provides the resources to pay for care services and meet the challenges of aging. 

LTC Insurance is Generally Simple

These policies work pretty simply. To receive benefits from your long-term care insurance policy, you meet two criteria the Benefit Trigger and the Elimination Period. A benefit trigger is usually a person who requires help with at least two of the six activities of daily living, known as "ADL's" or you require supervision due to a cognitive issue like Alzheimer's or dementia. The ADL's are:

  • The six ADLs are recognized as:
  • Bathing. The ability to clean oneself and perform grooming activities like shaving and brushing teeth.
  • Dressing. The ability to get dressed by oneself without struggling with buttons and zippers.
  • Eating. The ability to feed oneself.
  • Transferring. Being able to either walk or move oneself from a bed to a wheelchair and back again.
  • Toileting. The ability to get on and off the toilet.
  • Continence. The ability to control one's bladder and bowel functions.

Most policies include help as being either "hands-on" assistance or "stand-by" assistance (meaning you can still perform the ADL, but you need a person there just in case).

The elimination period is a deductible based on days. The standard is 90 days.

Today's Long-Term Care Insurance provides many options that didn't exist decades ago. There are traditional plans which provide outstanding value and options. These options include shared spousal benefits, case management, inflation options, and more. Consumers in 45 states can choose a traditional plan which is partnership certified. 

Partnership Long-Term Care Insurance provides policyholders with additional dollar-for-dollar asset protection. Asset-based plans, which are either life insurance or annuities with a rider for long-term care, provide outstanding value with a death benefit. Many states have short-duration plans geared for older people but still have at least average health.

Today's Long-Term Care Insurance policies are also rate stable. These policies, unlike legacy products marketed and sold decades ago, are priced under new regulations. In addition, these policies are priced based on an extremely low-interest-rate environment. This gives consumers additional peace of mind.

Don't Overlook Value of Traditional Partnership LTC Insurance

One of the most overlooked options are traditional plans which are partnership certified. Forty-five states have partnership plans which provide what is called "asset disregard." If you spend all the benefits from your LTC policy, they will disregard the amount paid by insurance when they calculate the Medicaid benefit. 

A state partnership plan allows a person to still qualify for Medicaid without spending down a majority of their assets. The purpose of the Long-Term Care Insurance Partnership program is to make the purchase of smaller policies even more meaningful by linking these special policies with Medicaid for those who exhaust their benefits but continue to require care. 

Often the only difference between a partnership qualified policy and other long-term care insurance policies sold in a state is the amount and type of inflation protection required by the state. Generally, with these traditional plans, you won't receive anything back to your estate if you are lucky enough never to need care. 

There are asset-based or "hybrid" plans which are life insurance policies with riders for long-term care or annuities with riders for long-term care. These are single premium but offer some type of death benefit. 

There are also what the industry calls "Short Term Care" policies. Short Term Care policies are much smaller benefit plans but allow more people to in good health to qualify. Also, older people who usually would not be eligible for a new long-term care plan may be eligible for a short-term plan.

LTC insurance is very affordable for most people.

 “The key to long-term care insurance is to apply early while it’s inexpensive.”

 Kevin M. Lynch, assistant professor of insurance at the American College of Financial Services in Bryn Mawr, PA 

There are many ways, according to experts, to save money when shopping. Experts suggest working with a Long-Term Care specialist who understands how you should design a plan based on your unique needs and budget, including your future retirement plans and where you plan on living when you retire.

They should work with the major companies, know the underwriting rules each company has in force, and experience claims. Remember, premiums can vary over 100% between insurance companies. Find an experienced and licensed specialist by clicking here

According to this report, the good news is you can expect to be able to avoid that nursing home. An LTC policy will help provide these choices without financial devastation and burden to your family.

Need Help Finding Care or Process LTC Insurance Claim?

LTC NEWS can arrange for free Long-Term Care Insurance claims processing and care coordination. No cost or obligation. If you have a loved one who has a policy and needs care - don't delay. Use the benefits they have in force. 

If your loved one does not have a policy and still needs long-term care, get professional help.

Click here now.

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About the Author

An LTC News author focusing on long-term care and aging.

LTC News Contributor James Kelly

James Kelly

Contributor since August 21st, 2017

Editor's Note

You should consider actions now to prepare for a future successful retirement and life in the decades beyond retirement age.

Long-Term Care Insurance will provide the guaranteed tax-free resources to pay for your choice of quality care, including in-home care. You will safeguard your income and assets allow time for your family to be family and not be burdened with caregiving. 

Research Tools on LTC NEWS

There are several ways to plan and fund a policy. LTC NEWS offers multiple tools and resources to help you research the financial costs and burdens of aging so you can find an affordable solution. 

Find all the resources on LTC NEWS by clicking here.

One of the best tools is the LTC NEWS Cost of Care Calculator. You can find the current and future costs of long-term health care where you live. This information will help you design an appropriate LTC Insurance policy.

Can Reverse Mortgages Help?

For some people, especially those who have most of their assets in the value of their home or who are already experiencing substantial health problems, a reverse mortgage could be a solution. Today's reverse mortgages can provide tax-free funds for income, care, or even fund the cost of Long-Term Care Insurance. Learn more by clicking here

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