You probably have experienced long-term health care in some way if you are at least 40 years old. Your parents, aunts, uncles, and neighbors may have experienced problems. When you have watched the news, listened to the radio, saw internet stories the issue of long-term care has been front and center. Families go into crisis mode trying to find care services or taking on the role of a caregiver. The COVID-19 crisis has intensified the problem.
Below you will see the best available options in 2021 for Long-Term Care Insurance. You can read about the top three LTC insurance companies for 2021. See the recommended options for asset-based "hybrid" policy options. This information will help you in your research to plan for the high costs of long-term health care.
The cost of long-term health care is expensive and grows every year. The financial devastation on families adversely reshapes lifestyle and legacy. The role of the caregiver is physically and emotionally demanding. More families understand the importance of planning to prepare their families and finances for the consequences of changing health and longevity.
The solution many experts talk about is Long-Term Care Insurance. Self-funding future long-term health care is problematic for most people as it requires a substantial amount of assets to set aside. Unless you have an excess of $5 million of assets not tied up in businesses or investments, self-funding won't work. Even if you have that kind of money you may still want the benefits of a policy.
The other problem with self-funding, other than using your own money, is you do not know when you will need care. Long-Term Care Insurance gives you guaranteed tax-free benefits starting on day one and grows every year with a guaranteed inflation rate. Plus, you will not be using your own money. There are other features and benefits with LTC Insurance as well, depending on the company.
Things to Consider
Many options are available; the question is which one makes the most sense and fits into your budget? There are a few things to keep in mind
- Long-Term Care Insurance is medically underwritten. Every company has its own criteria. You need reasonably good health to obtain coverage, but again, the rules vary between companies.
- Policy premiums vary dramatically. The difference can be over 100% between insurance companies for the same or similar benefits.
- Premiums get calculated by several factors. These factors include your age when you apply, your health, and your family history.
- Regulations mean there are more similarities between insurance companies than differences in product features and benefits. However, there can be substantial differences in key areas like inflation options, partnership certification, and shared spousal benefits
Traditional Long-Term Care Insurance still offers the most benefits at the best value. In 45 states, Partnership Long-Term Care Insurance provides additional dollar-for-dollar asset protection, which is not available with asset-based "hybrid" policies or limited duration "short-term" policies.
Traditional plans offer the most tax benefits for both individuals and those who are self-employed or business owners. For "C" corporations, they can deduct 100% of the premium as a business expense. There are tax benefits for LLCs, "S" corporations and sole proprietors as well. Plus, businesses do not have to offer the benefit to everyone. Perhaps just the owner and their spouse or key executives, LTC Insurance can be an executive carve-out benefit rewarding top staff. Also, Long-Term Care Insurance is guaranteed renewable for life. If purchased within a business, the policy is portable and remains with the policyholder.
Generally, there is no death benefit with traditional LTC Insurance. However, a few companies have a return of premium rider available at an extra charge. The rider increases the premium significantly, but your estate does get your money back if you are lucky enough never to need care.
Premiums with traditional LTC Insurance are intended to remain level. There are many good intentions in the world, but "intended" does not mean "guaranteed." Unlike older product series sold decades ago, often referred to as "legacy policies," today's Long-Term Care Insurance is priced based on the extremely low-interest-rate environment. Most states have rate stability rules that make it much more difficult to have approved premium increases in the future.
Some insurance companies offer limited payment options with traditional LTC policies. The policyholder can set up their payments, so they have a fully paid policy in ten years. One company offers a single pay option. With limited payment options, if the insurance company ever has an approved rate increase, you would not be subject to it if you have already paid your premium in full.
Most Long-Term Care Insurance policies offer similar basic benefits. They are all comprehensive paying for long-term care services in any setting, skilled, semi-skilled, in addition to homemaker and companionship services. LTC Insurance policies will also pay for adult day care centers, assisted living facilities, memory care, and the traditional nursing home.
The policyholder gets to decide the type of care they wish to have once they qualify for benefits. Most Long-Term Care Insurance claims start with in-home care, but you and your family are in control.
How to Trigger Benefits
The trigger for most tax-qualified Long-Term Care Insurance policies includes help with activities-of-daily living (ADLs) or supervision due to cognitive impairment.
Your health care professional must certify that you need help with at least two of the six primary ADLs. The ADLs are
It does not matter whether you need "hands-on" or "stand-by" assistance. The inclusion of "stand-by" assistance is essential. It means you can still perform the ADL by yourself; however, you need another person within arm's reach to prevent you from harming yourself while performing the activity.
The cognitive impairment will always include Alzheimer's and other forms of dementia. When a person has some form of dementia, they will often require supervision to protect them from health or safety threats. People may wander and find themselves outside in the elements or get lost and cannot find the way home. Just like a child, this can happen quickly.
Those with dementia may turn on the oven, for example, and leave it on. People with cognitive decline can often perform their ADLs independently but require verbal prompting from another person.
A qualified Long-Term Care Insurance specialist can explain the benefits triggers in detail.
Additional Policy Benefits
Most LTC Insurance policies, including the ones listed here, will pay for other items as well. These include:
- Nutritional and dietary services
- Physical, occupational, speech, and respiratory therapy
- Homemaker services
- Respite care for informal non-paid caregivers
- Caregiver training
- Limited amount of equipment and home modification
- Care coordination (case management) services
Only a few companies have international benefits, and then it is usually limited. Most companies, but not all, have an alternate plan of care benefit. This benefit makes the policy a more living, breathing document. It allows the insurance company to pay for items not specifically listed in the policy as long as it benefits the policyholder at the time of claim and is cost-effective.
Regulation of Insurance Products
Long-Term Care Insurance is regulated by both the states and the federal government. This regulation should give the policyholder additional peace-of-mind. All tax-qualified Long-Term Care Insurance policies fall into federal regulation according to the Internal Revenue Service Code Section 7702(b). Any traditional or asset-based hybrid policy should have indicated the policy is intended to comply with Section 7702(b).
There are tax benefits available when you own a tax-qualified Long-Term Care policy. You can learn more by clicking here.
Short-term limited-duration policies will not fall into this category. However, most policies in this category will follow the same benefit triggers.
Life insurance policies that only have a chronic illness acceleration rider are not long-term care and do not comply with Section 7702(b). These chronic illness riders attached to life insurance policies are not legally allowed to be called Long-Term Care Insurance.
These types of policies fall into Section 101(g) of the U.S. tax code. The policyholder has access to the death benefit early if they meet the definition of being chronically ill. The term "chronic illness" is not legally defined and can vary between insurance companies.
These chronic illness riders are sometimes named "living benefits." Because of benefit definitions and exclusions, along with the limited available benefits, they are NOT recommended as a solution for long-term health care.
LTC NEWS spoke to a handful of the nation's leading Long-Term Care Insurance specialists to review Long-Term Care Insurance's top options in 2021. Here are the top options for traditional Long-Term Care Insurance in 2021:
2021’s TOP Long-Term Care Insurance Options
The Top Three
1. Mutual of Omaha
Mutual of Omaha has been a leader in Long-Term Care Insurance for many years. Mutual of Omaha (a mutual insurance company) is rated A+ Superior by AM Best and has outstanding ratings with all the primary rating agencies for financial strength.
Mutual of Omaha has recently updated its popular MutualCare Custom Solution and MutualCare Secure Solution. Unfortunately, it is more expensive than the previous product but remains the overall best value and is ranked number one.
Most Long-Term Care Insurance specialists use MutualCare Custom Solution because of its wider variety of options. Perhaps the most important option is their inflation "buy-up" option. The policyholder can increase their inflation benefits in the future (through age 74) without evidence of insurability. Since most people purchasing LTC Insurance are in their 50s, this gives the policyholder the ability to increase their benefits when their health starts declining.
There is a spousal discount if a married or partnered individual applies without their partner. Mutual of Omaha is much more expensive for single women.
Mutual of Omaha is partnership certified in most of the states that participate in the partnership program
Mutual of Omaha has two products, "Custom Solutions" and "Secure Solutions." Custom Solutions is the preferred plan for most consumers and the one most Long-Term Care Insurance specialists will recommend.
- Financially very strong
- Outstanding reputation
- Highly customizable
- Available shared spousal benefits
- Multiple inflation options
- Good health and spousal discounts
- Very affordable for single/partnered men
- International benefits
- Shared spousal/partner benefits available
- Affordable but more expensive than in the past
- Unavailable if both your parents had been diagnosed with dementia/Alzheimer's
- More expensive for single women
2. National Guardian Life (NGL)
National Guardian Life (NGL) is a mutual insurance company founded in 1909 with nearly $5 billion in assets. NGL has been in the long-term care marketplace since 2016, although the product was designed by experts with decades of experience. NGL is a financially strong company with an AM Best rating of A.
The biggest benefit of the NGL plan is their shared "third pool" partner benefit. NGL offers a couple one policy for two people. Each person has their own benefit account that grows with inflation. However, when the shared option is selected, they get an additional third account that also grows with inflation. If either person exhausts their own benefits, they can dip into the third account. NGL's shared benefit offers policyholders with outstanding coverage for the money, depending on the application age.
NGL is a very conservative underwriter. Be sure you don't have a health issue that would make it difficult to get coverage or place you in what they call a "standard" rate which is comparable to other companies' substandard rates. The insurance agent or advisor should ask you many detailed questions about your health before even considering this company.
Another concern is their use of a "daily" benefit instead of a "monthly benefit" many companies offer. With a daily benefit, the company looks at bills each day instead of all the bills at the end of the month. When you have in-home care, you might have multiple providers on one day, causing that days' cost to be higher. With a daily benefit you could see more out-of-pocket expense than you would with a monthly benefit.
NGL is partnership certified in most of the states that participate in the partnership program. Pricing is perhaps the primary reason to consider NGL; however, their lack of customization could cause them to be more expensive at some ages.
There is no spousal discount if a married or partnered individual applies without their partner. NGL is much more expensive for single women.
NGL has two limited pay options. You can pay the premium in one payment or ten years and have a fully paid policy with no additional premium ever required.
Recent Changes Make NGL Less Competitive
National Guardian has made changes in their current product, and this includes a new premium structure which makes the product much more expensive for new buyers.
This increase has NO impact on any existed policy or application. Not every state will approve the new refreshed rates simultaneously, but the first group of states was effective on April 1, 2021, starting with the following 38 states: AK, AL, AR, CO, GA, IA, ID, IL, KS, KY, LA, MA, MD, ME, MI, MN, MO, MS, NC, NE, NH, NM, NV, OH, OK, OR, PA, RI, SC, TN, TX, UT, VA, VT, WA, WI, WV, WY.
- Limited payment options available
- Third shared benefit account for couples
- Waiver of premium at the time of claim waives 100% of a couple's premium since it is one policy for two people
- Very conservative underwriting
- Only offers a "daily benefit" - no monthly benefit available
- No alternative benefit option - future changes in caregiving and technology would not be covered
- Limited inflation options
3. Thrivent Financial
While financially stronger than NGL, Thrivent comes in at number 3 for the same reason some people might place it as being number one. Thrivent is a non-profit fraternal organization. A Fortune 500 company, Thrivent has the highest AM Best Rating of A++ (Superior).
The company was founded as a mutual benefit society by Lutherans, but today, Thrivent offers products to all Christians. Policyholders must indicate they share Christian values as living their life as a Christian or being married to a Christian. The company's commitment to Christian values is either a strong positive for consumers or could be a hurdle for others.
Thrivent's Long-Term Care Insurance product uses a monthly benefit to pay for future care. The policyholder creates a benefit account with a benefit period that creates a pool of money. If the policyholder does not use the maximum amount of available monthly benefit at the time of claim, the remaining money stays in the account and grows with inflation.
The company offers shared spousal benefits and several inflation options, which makes customization easier. Thrivent's shared benefits work similarly to Mutual of Omaha as opposed to NGL's third pool concept. The rider links two policies together. If one spouse exhausts their benefits, they can access the other spouse's benefits. However, when one spouse passes away, 100% of the remaining unused benefits will go to the survivor even though the premium has disappeared.
Single women, again, pay for more coverage compared to single men. Spousal discounts are also available. The policy also offers a cash rider giving the policyholder additional cash at the time of claim.
Their underwriting standards require a longer stability period following recovery compared to most companies. You might have to wait longer to be eligible to purchase coverage than with most other companies. Again, make sure your agent asks many health questions before considering Thrivent as an option.
Their 10-pay option allows you to have a fully paid policy within ten years with no additional premium ever required.
Thrivent is partnership certified in most of the states that participate in the partnership program.
- Financially very strong
- Outstanding reputation
- Non-profit and pays dividends
- Multiple inflation options available
- Shared spousal/partner benefits available
- Cash rider available at extra charge
- Care coordination available at the time of claim
- Limited payment option available
- Religious affiliation eliminates some people
- Much more expensive for single women
- Elimination periods requires at least one day of paid services in a calendar week to receive credit for seven calendar days
New York Life
New York Life is an outstanding and financially strong insurance company. They also affiliate with AARP with a branded Long-Term Care policy. Despite being financially strong, the premiums are very high. NY LIfe also offers a product called "My Care" that comes with cash deductables and an 80/20 co-insurance structure.
Note, New York Life agents talk about dividends. Don't depend on any future dividends to ever pay back the cost differences between New York Life and other companies.
Consumers will find much better value elsewhere.
Just like New York Life, Northwestern Mutual is an outstanding and financially strong insurance company. However, premiums are very high and not competitive at all.
Consumers will find much better value elsewhere.
LifeSecure (Blue Cross - Blue Shield of Michigan)
At one time, LifeSecure was one of the leaders in individual Long-Term Care Insurance. However, several years ago, they stopped offering individual products and concentrated on the employee benefits market.
The current product is very basic and not very competitive against other products; however, it could be an option if your employer plan includes relaxed underwriting — neutral rating.
There are several companies not recommended. These companies include:
Bankers Life is the primary subsidiary of CNO Financial Group, Inc. (itself formerly Conseco, Inc until 2010). They have improved their AM Best rating to A- but the company and its parent have had financial problems in the past.
In addition to the past financial issues, the company has gained a reputation for not paying claims. A report by CBS News highlighted some of Bankers Life customers' problems when processing claims. There are also numerous poor online reviews; however, most reviews of any company are negative by nature.
There have also been media reports of high-pressure sales tactics used by Banker's Life agents. All their products are sold by "captive agents" that only offer their products.
The product itself is in line with most other policies and has mnay available extra options you can choose a extra cost. Banker's Life still uses a daily benefit instead of a monthly benefit, but overall has numerous features and options. However, considering everything, Banker's Life is not recommended.
Federal Long-Term Care Insurance Employee Plan
John Hancock administers the LTCFEDS plan that is available to federal government employees and their spouses. The pricing for this product is very competitive; however, there are numerous pitfalls.
The biggest downfall is the fact the policy is not partnership certified in any state. Also, the federal government does not have to abide by any state's insurance rules, including rate stability.
The benefit trigger on the policy includes the word, "and we agree." The language could impact the ease of making a claim in the future.
Unlike every normal insurance company, there are no premium classes based on gender since it is a group employee plan. Since women live longer and thrive in a care environment longer, the federal plan may have additional pressure to maintain premiums over a long period of time.
The plan also uses daily benefits instead of monthly benefits and includes several inflation options. However, since there is no agent involved, many federal employees select the future purchase option. The premium will go up every time you wish to adjust benefits to keep up with the higher cost of care. The premiums would then keep going up.
John Hancock, however, has a good reputation as the administrator for the program. Federal employees should look at this plan, but if they can afford other options, they should consider doing so. It may be tempting to purchase this policy; however, it remains as NOT RECOMMENDED.
Knights of Columbus
The Knights of Columbus are similar to Thrivent but limits availability to Roman Catholics. Very financially strong, the Knights have a good reputation. However, Long-Term Care is not a primary product.
The biggest downfall is the policy includes "usual and customary" language. At the time of claim, no matter what benefit you selected, and the actual cost of care being charged to you, the insurance company will determine if the charge is "usual and customary." For Long-Term Care Insurance, this is an unusual provision that can limit the benefit you have available at the time of claim. For this reason, this policy is NOT RECOMMENDED.
Asset-Based "Hybrid" Long-Term Care Insurance
Asset-based "hybrid" policies combine a life insurance policy with that of a long-term care policy. Either way, you will either get the death benefit or the long-term care benefit. They are typically paid with one single premium and are expensive; however, you do get the death benefit at the end.
The only Hybrid policies recommended are products that provide federally tax-qualified long-term care insurance as defined in IRS Code Section 7702B(b). The primary companies for these products are:
Nationwide and Securian offer cash benefits. Hard to beat a cash benefit. The company will pay you the full available benefit, in cash. You can use the money to pay anyone to provide care. If you want complete flexiblility at the time of claim one of these cash policies will be the solution.
One America also offers an annuity/long-term care product that offers reduced underwriting.
Brighthouse offers a plan that is considered a 7702(b) policy but is less competitive.
All of these are highly rated and financially strong companies. If you decide an asset plan is best for you and your family, then limit your research to the above companies.
Limited Duration/Short-Term Care Options
These products are not long-term care; however, for some people, they can provide some benefits that can be beneficial when other options are not available - or for a person to add to an existing Long-Term Care Insurance policy. In addition, these products are not available in every state. You can see if your state has one of these products by clicking here.
Aetna has two available products.
Recovery Care is the most comprehensive. It is a cash indemnity policy. Once you qualify for benefits, the policyholder gets the full eligible benefit in cash no matter the size of the actual bill. With a cash benefit, you can use any provider you wish, including family.
It will pay up to 360 days for any long-term care facility (nursing home, memory care, rehab, or assisted living facility). In some states, it offers a restoration of benefits that provides an additional 360 days if you recover and go 180 days without requiring care. The maximum benefit choice is $300 a day.
It pays up to 52 weeks of in-home care. The maximum benefit choice is $1200 a week. It also has a restoration of benefits in some states.
There is also a hospital indemnity that offers up to $300 a day every day you are in the hospital. This benefit has nothing to do with your health insurance or Medicare. It pays cash directly to you for each day in the hospital. The idea if as you get older, you typically go to the hospital more often. Many times after leaving the hospital, you go to care either in-home or in a facility.
Underwritingis much broader than Long-Term Care Insurance.
Aetna also offers Home Care Plus. This product eliminates the facility portion of the product above. Some people who are ineligible for Recovery Care may qualify for this product.
Standard Life has a similar product to Recovery Care and uses the same name. The underwriting is a bit more conservative.
Guaranteed Trust Life (GTL) has some options that some consumers may add to the above products.
Seek Professional Advice
It is imperative that you seek the help of an experienced Long-Term Care Insurance specialist who will help you navigate the many options available.
Planning for the financial costs and burdens that come with aging is a critical part of an overall retirement plan. However, most financial advisors or general insurance agents lack the expertise in this area. In fact, many are not "partnership certified" and do not complete the required ongoing professional training in all of these products.
Be sure your "specialist" is actually a specialist. A Long-Term Care Insurance specialist should represent the major companies that offer these products. They should have experience not in years - but in the total number of clients they have helped with long-term care planning. Some specialists have over a thousand clients; your specialist should have at least a few hundred.
The specialist should also have complete knowledge of the partnership program, underwriting, policy design, and claims.
You can find a trusted and qualified specialist by clicking here.
Best to Plan Early – Ideally in Your 40s or 50s
It is always best to start planning for long-term health care before you retire, ideally in your 40s or 50s, when premiums are at the lowest, and your health is better.
The fact is you will experience changes in your health, body, and mind in the decades ahead. Prepare your family and finances with affordable Long-Term Care Insurance. Not only will you safeguard income and assets, but you will reduce the stress and burdens otherwise placed on your family.
Preparing your family and finances for the future costs and burdens of aging is an essential part of retirement planning. But Long-Term Care Insurance is more than just about money.
Yes, long-term health care is a significant cash flow issue. LTC Insurance addresses this problem. But, long-term care is also a family issue. Without any plan in place, the family will go into crisis mode. The result can be a disaster for you and your family, and your wishes may take a back seat.
An LTC policy keeps you in control and helps avoid becoming dependent on your children decades from now. You will have access to guaranteed tax-free benefits that will pay for your choice of quality care, either in-home or in a facility.
You can safeguard your 401K, IRA, and other assets and maintain your lifestyle once you retire. However, Long-Term Care Insurance is medically underwritten, so you must have reasonably good health to obtain coverage. Plus, premiums are calculated on your age, health, family history, and other factors.
Many Tools Available on LTC NEWS for Research
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.
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