Decoding Your Long-Term Care Policy: A Guide to Maximizing Your Benefits
Imagine facing a sudden health issue, accident, or even the impact of aging that leaves you needing help to get dressed, eat, or bathe. Now imagine your family scrambling to figure out how to pay for that extended care or who’s going to provide it.
That’s the reality many families face without a long-term care plan in place. If you already own a Long-Term Care Insurance policy—or you're thinking about getting one—understanding the terms and how it works is key to getting the benefits you need.
Here’s how to make sense of your benefits, understand your choices, and maximize your long-term care protection.
What Do Policy Features Actually Mean?
Your Long-Term Care Insurance policy, or one you are probably considering purchasing, is built around several core features.
The benefits will be very similar if the LTC policy meets federal guidelines.
These define how and when benefits are paid:
- Monthly Benefit: This is the maximum amount your policy will reimburse for care each month (or each day). Policies may offer daily or monthly caps, such as $5,000/month.
- Benefit Period or Pool of Money: Some policies use a benefit period (e.g., three years) to calculate the amount of money in the policy at any point in time, while others use a specific dollar amount. In either case, these benefits can grow with inflation. Once that pool is used up, benefits stop. Some policies offer unlimited benefits -- meaning the benefits can never be exhausted.
- Inflation Protection (or Inflation Rider): This increases your benefits over time, helping your policy keep pace with rising care costs. Common types range from 1 to 5 percent compound annual increases. Usually, the cost of this inflation benefit is included in the cost of the premium.
- Elimination Period: Consider this your policy’s deductible, measured in days. It’s the waiting period between when you start needing care and when benefits kick in. Some policies count calendar days, while others only count days you receive paid care.
Remember, health insurance and Medicare only pay for short-term skilled care, not custodial long-term care, which most of us will need at some point in our lifetime.
- Covered Services: These may include in-home care, adult day care, assisted living, memory care, or nursing home care. Review your policy to understand where care can be received.
How You Can Access Benefits (Triggers)
Long-Term Care Insurance benefits don’t activate automatically—you must meet specific “triggers” for a claim to begin. Most LTC policies require that you need substantial assistance with at least two out of six activities of daily living (ADLs). These include bathing, dressing, eating, toileting, transferring (such as getting in or out of a bed or chair), and maintaining continence.
| Activity of Daily Living | Definition |
| Bathing | Washing oneself, including getting in and out of the bath or shower. |
| Dressing | Putting on and taking off clothing and necessary medical devices. |
| Eating | Feeding oneself by getting food into the body. |
| Toileting | Getting to and from the toilet and performing associated hygiene. |
| Transferring | Moving in or out of a bed, chair, or wheelchair. |
| Continence | Controlling bladder and bowel function or managing incontinence. |
Alternatively, a cognitive impairment such as Alzheimer’s disease or another form of dementia also qualifies.
A licensed healthcare practitioner, typically your doctor or a nurse, must certify your condition and need for care.
Once that certification is on file and your elimination period has been satisfied, your policy will begin to pay benefits. Some insurers will assign ( or pay for) a care coordinator or elder care case manager to help guide you or your family through the claim process, develop a plan of care, and find caregivers or facilities.
Understanding these triggers in advance can reduce stress when the time comes to file a claim—and ensure there are no delays in accessing care.
How Your Benefits Work in Real Life
Let’s say you develop a chronic condition that makes it hard to bathe, dress, or manage medications. Once a doctor certifies your need for help with at least two activities of daily living (ADLs) or supervision, and you satisfy your elimination period, your policy begins to pay benefits.
This money can cover:
- Home health aides or professional caregivers
- Assisted living or memory care communities
- Skilled nursing home care
Most people want to stay in their homes as long as possible," says Matt McCann, nationally-known Long-Term Care Insurance specialist associated with Platinum LTC Solutions. "Having a policy in place ensures they have options, not just what their family can cobble together.
Once there is a need, you or a loved one needs to process the Long-Term Care Insurance claim.
One example: Carol, age 78, had a policy she purchased at age 57. When she developed early-stage dementia, her benefits allowed her to receive care at home for over two years before transitioning to a memory care community of her choosing. Her children never had to become full-time caregivers—and her savings remained intact.
Gaining Access to Better Care and More Choice
Long-Term Care Insurance puts you in control of your care decisions. Without an LTC policy, families often face hard choices based on cost, not quality.
With benefits in place, you can:
- Choose higher-quality providers or facilities
- Avoid long Medicaid waitlists
- Receive care at home, where most people feel most comfortable
Many policies even offer caregiver training or respite benefits to support family members helping with your care.
More importantly, these benefits allow your loved ones to remain just that—your loved ones. Instead of becoming your full-time caregiver, your spouse or adult child can focus on being your emotional support, advocate, and companion. That time together can be more meaningful when it isn’t spent managing medications, handling personal care, or arranging service schedules.
Protecting Your Assets and Your Family
A long-term care event can quickly drain retirement savings. According to an ongoing survey of long-term care costs nationwide, the average monthly costs of long-term care services can range from $5,000 to $18,000+ a month, depending on care type and location.
Your LTC policy helps protect:
- Your income and savings: Prevents liquidation of assets to pay for care and protects your lifestyle.
- Your estate: Preserves what you plan to leave your spouse and family.
- Your independence: Lets you make decisions about care without burdening loved ones.
Time is one of the most precious gifts you can give your family. Long-term care coverage helps preserve that time, so your loved ones aren’t forced into unpaid caregiver roles or managing complex care arrangements. They get to spend time with you as family—not as nurses, coordinators, or exhausted decision-makers.
Tax Benefits You Should Know
Long-Term Care Insurance premiums may be tax-deductible depending on your age and tax status. If you have a Health Savings Account (HSA), you can often use pre-tax dollars to pay for premiums.
For business owners, premiums can be a deductible expense. Also, all benefits paid from tax-qualified long-term care policies are received income tax-free.
How to Read or Evaluate a Policy
If you’re evaluating a policy—or trying to understand the one you or a loved one already owns—ask these questions:
- Is this a tax-qualified LTC Insurance policy?
- What is the elimination period?
- What is the monthly or daily benefit cap?
- Does the benefit increase with inflation?
- Are both home care and facility care covered?
- What triggers a claim?
- Is there a care-coordination benefit?
You can request a copy of your policy's Benefits Summary Page or Schedule of Benefits from your agent or insurer. LTC News has partnered with Amada Senior Care to provide a free nationwide service to assist families in processing LTC Insurance claims.
This no-cost service helps you:
- Review your LTC Insurance policy
- Confirm benefit eligibility
- File claims and complete documentation
- Coordinate care to activate benefits faster
This service is available to any policyholder—regardless of insurer—and can be accessed directly through the LTC News Claims Resource Center.
If you’re considering coverage, work with a Long-Term Care Insurance specialist who can compare multiple companies offering long-term care solutions and explain differences clearly.
Final Thoughts: Planning Means Empowerment
A long-term care policy is more than a safety net—it’s a tool for dignity, independence, and family harmony. But only if you understand it.
Take time to review your policy or speak to a qualified specialist. The right coverage can mean the difference between a crisis and a plan.
If you have not yet included a Long-Term Care Insurance policy as part of your retirement plan, be sure to do so before you have significant changes in your health. Most people acquire an LTC policy between the ages of 47 and 67.
LTC Insurance is a very valuable asset that ensures you have access to quality care, protects income and assets, and reduces the stress and anxiety otherwise placed on your loved ones.