When you think of insurance, what comes to mind? Your regular health insurance, certainly. Probably home or car insurance. Hopefully, Long-Term Care Insurance is on your radar as well. Short-term care insurance can help offset a portion of long-term care costs or cover you before a long-term care policy kicks in.
But when was the last time you thought about short-term care insurance? Many don’t even know it’s a possibility. But for those who are unable to obtain Long-Term Care Insurance, due to preexisting conditions or other reasons, a short-term policy could be exactly what you’re looking for!
Let’s be clear on another fact: short-term care insurance can save you tens of thousands of dollars if it’s used correctly.
If you’re wondering how - and when - this can be true, read on! We here at LTC News have helped thousands of people learn about the benefits of Long-Term Care Insurance, and we’re excited to help you understand the benefits, costs and considerations for short-term care insurance as well.
In this article, we’ll cover:
- What is short-term care?
- What is short-term care insurance? And how this differs from Long-Term Care Insurance.
- Who should consider short-term care insurance? What are some of the primary benefits of it?
- We’ll discuss age requirements, elimination periods, the underwriting process, and give some examples of policies and premium costs.
What is Short-Term Care?
Short-term care can refer to numerous types of care, and insurance plans for it work much like they do for long-term care. There are some key differences, though, which we discuss below.
The length of care can vary, but is most often anywhere from days to months long.
Tasks can include, but aren’t limited to, bathing, preparing meals, laundry, and dressing oneself. Depending on the severity of the condition, additional skilled tasks may include dressing wounds, providing speech therapy, rehabilitation services and monitoring health levels utilizing medical equipment. Triggers for short-term care insurance are the same ADLs (activities of daily living) as Long-Term Care Insurance, but there is no requirement that care needs to last 90+ days.
Short-term care can take place in a long-term care facility, including rehabilitation centers, assisted living, memory care centers and nursing homes, but just as often it takes place in the home.
Some people who can’t qualify for Long-Term Care Insurance are still eligible for short-term care insurance. It’s also a misconception that this sort of short-term care is only for seniors. Any qualifying individual can benefit from short-term care insurance. Many people use their short-term policy as they might a long-term care policy. The only major difference is that the benefits last a limited amount of time.
What Is Short-Term Care Insurance?
While short-term care insurance bears a resemblance to Long-Term Care Insurance, it's important to distinguish their differences. Generally, a short-term care insurance policy operates as a cash indemnity plan that covers a period of one year or less.
Some policies may extend to approximately two years, offering in-home and facility care benefits.
Additionally, many policies have a restoration of benefits provision, which means that you can restore benefits after a period where you don’t require care.
Facility Care Vs. Home Care
First, it’s important to note that facility care and in-home care can both be covered by a short-term care insurance policy. This is true of long-term policies as well. The only major difference is the location of care. We discuss some of those location types below.
Home care refers to a variety of custodial care responsibilities that may be completed by an informal caregiver such as a family member, or a trained care specialist. The care can be skilled or semi-skilled, just as with facility care.
Residential care homes exist that provide short-term care. Some are specialized for certain citizens, such as community nursing homes and living centers operated by the Department of Veteran Affairs (VA). Some states also operate Veterans Homes for short-term care that are partially funded by the VA.
On the more acute end of the care spectrum, skilled nursing facilities are designed for skilled or intense care, but are not designed for long-term stays. This separates them from traditional nursing homes and other facility types such as independent living and assisted living centers, which are long-term solutions. The majority of short-term centers have limits to the length of stay.
Hospice and palliative care is another form of home care, often for those with a terminal condition, or where personal comfort is a priority. In both situations, the expectation is that it will not be a long-term need, although some long-term policies will pay for Hospice if it’s required.
How is This Different Than Long-Term Care?
The biggest difference is that long-term care generally refers to situations that are expected to be ongoing due to age, a debilitating or progressive illness, or other non-reversible condition. While it’s true that there are instances where people recover from a long-term condition and are able to live independently once again, this can be rare.
Short-term care can include many of the same tasks and responsibilities as long-term care, so on a day-to-day level, it can look similar. The length of insurance coverage is again the biggest differentiator.
Difference in Insurance for Long-Term vs. Short-Term Care?
The first, and largest, difference between these insurance types is how long the benefits will last.
Short-term care insurance policies will last until the policy’s benefits are exhausted, and will always pay the full policy benefit in cash, regardless of what the service bill may be. Typically, this will be for a year or less. Some short-term care situations can extend beyond this, to approximately two years. These numbers can vary significantly depending on what is covered for in-home care, facility care, plus restoration of benefits if this provision is included in the policy.
Additionally, in Long-Term Care Insurance policies it must be certified that the care is expected to last at least 90 days. This same certification is not required for short-term care policies.
Deductibles and Payments
A distinct feature of some short-term care insurance policies is the 0-day deductible (or Elimination Period) that often comes standard for home care and is usually available as an option for facility care. This allows the policyholder to access benefits immediately once they qualify for benefits. Not all policies will have a 0-day elimination period, since it can cost extra to include this in a policy. However, it can be an option in specific situations.
Perhaps the standout advantage of short-term care policies lies in their relaxed underwriting criteria.
The majority of short-term care applications have up to ten health-related questions. Some insurance providers may also scrutinize the applicant's prescription drug history since certain medications could render them ineligible for coverage.
Can I Qualify For a Short-Term Care Policy if I’m Ineligible for Long-Term Care Insurance?
Yes, this is possible. Notably, an individual deemed uninsurable under traditional or hybrid Long-Term Care Insurance may still qualify for a short-term policy. Just because you are ineligible for Long-Term Care Insurance, does not mean you won’t be able to receive short-term care insurance. In fact, this is one of the best reasons to consider short-term care insurance.
Age Requirements for Short-Term Care Insurance
In addition, short-term care insurance policies will consider applicants well into their 80s. This is different from traditional Long-Term Care Insurance, where most companies will not consider applicants for new coverage over the age of 79. Pricing and underwriting standards make Long-Term Care Insurance prohibitive for many who apply in their 70s as well, which can make short-term care insurance more attractive.
Who Should Consider Short-Term Care Insurance?
There are several good reasons to consider short-term care insurance:
- You or your spouse have been declined for traditional Long-Term Care Insurance. You may still be eligible for short-term care insurance. While the benefits are more limited than a traditional policy, a short-term care policy will provide cash to pay for your choice of quality care, protecting assets and reducing the stress and burden otherwise placed on loved ones.
- You or a loved one has multiple health issues that make it difficult or impossible to obtain Long-Term Care Insurance.
- Older adults seeking a more cost-effective option compared to Long-Term Care Insurance. Premiums are based on the age you are when you obtain the policy, so a long-term premium will be higher depending on your age when you are considering it. In some cases, short-term care insurance may remain more affordable.
- Another is to ensure that you have the proper level of care during a recovery period, and don’t have to sacrifice your quality of care for financial reasons.
- Short-term care policies can cover individuals during a Long-Term Care Insurance elimination period. This elimination period in Long-Term Care Insurance policies is the deductible period once you require care. Short-term care insurance can be a safety net for these periods.
- It can be simple to quickly apply and qualify for short-term care insurance. The underwriting process is generally not as rigorous as insurance applications for long-term care.
- Policies can be more affordable, particularly for women, single or married, since short-term care policy premiums are not affected by your gender.
- Lastly, it can lessen your financial burden even when you have health insurance or Medicare covering aspects of your care, working in conjunction with these sources to cover deductibles.
Some of these may be more pressing to you than others. But all of them can be compelling reasons to consider short-term care insurance.
What Does Medicare and Traditional Health Insurance Cover?
One of the best aspects of short-term care insurance is that it can work in tandem with traditional health insurance and Medicare coverages in some cases. Importantly, Medicare will still only pay for skilled services, not custodial service. As a reminder, a short-term policy can cover deductibles in traditional health insurance, Medicare, and long-term care elimination periods that we discussed earlier. This is in addition to covering uncovered custodial care.
Despite the triggers for benefits often being the same as Long-Term Care Insurance, this is something that differentiates short-term from long-term care policies.
That said, Medicare and regular health insurance policies often have strict limits for skilled care coverage, and generally nothing for in-home custodial care.
At times in the past, Medicare used a “progress toward recovery” standard to determine ongoing coverage. But if the patient plateaus, the care would be considered “maintenance” instead of rehabilitative. Medicare does not consider this to be skilled care in the same way, and would stop providing for it. So there’s a risk even when the care falls under specific rehabilitative guidelines.
Cost of Short-Term Care Insurance
Exact costs are based on numerous factors specific to you and your policy. There isn’t a “one size fits all” solution with short-term care insurance.
That said, the full range of short-term care insurance costs can be as wide as $75 per month (or less) to as much as $300 per month.
Some of the factors that affect this range are:
- Your age. As you age, premiums will increase. For clarity, premiums are intended to remain level from when you obtain coverage, but premiums are, in part, based on the age at which you obtain the policy.
- The specific benefits in your policy.
- Whether the insurance covers only home-based care or facility-based care in a nursing home or other location.
- The maximum benefit to the policy, which may be calculated daily, weekly or monthly.
Unlike Long-Term Care Insurance, gender does not factor into the cost of short-term care insurance. Men and women with identical policies and underlying conditions can expect to pay the same rates.
As an additional safeguard, your premium would only increase if the insurance company files for a rate increase through the state's insurance department.
Example: Short-Term Care Insurance Plan
Below we outline a hypothetical short-term care insurance plan. Please note that this is based on specific benefits that can change from year-to-year, state to state, and based on the individual’s age and health needs. For an exact quote, speak to a Long-Term Care Insurance specialist that offers these products.
Additionally, this won’t cover all possible care types or possible exclusions. For a comprehensive insurance policy, having options prepared by a specialist is the best way to understand the exact benefits you can receive. However, this example should give you a sense of the types of coverages that are common in short-term care insurance plans.
- Facility Care Daily Benefit: $300 [Note: some companies can do up to $400]
- Elimination Period: 20 days [Note: 0, 20 and 100 days are most common]
- Benefit Period: 360 days
- Lifetime Maximum Benefit Period: 2x benefit period (assuming a recovery of at least 180 days)
- Bed Reservation Period: 10 days (lifetime max: 20 days)
- Prescription Drugs: $10 Generic / $25 Brand ($300 Policy Year Max) [Note: Not all short-term care policies offer this benefit. Fixed cash indemnity amounts can vary depending on the company and if the medication is generic or name brand. This is paid regardless of your health insurance coverage]
- Restoration: Restores facility care or home health care benefits after the 180 days out of care need is satisfied, up to lifetime max benefit period, which is normally double the starting benefit period.
OPTIONAL BENEFITS - HOME HEALTH CARE
- Home Health Care Daily Benefit: $1,200 per week [Note: terms will vary, with some policies offering benefits per day or week]
- Elimination Period: 0 days
- Benefit Period: 52 weeks
- Lifetime Maximum Benefit Period: 2x benefit period
OPTIONAL BENEFITS - HOSPITAL INDEMNITY
- Daily Benefit: $50 [Note: Some companies will offer up to $400 per day for this benefit]
- Benefit Period: 6 days [Note: Benefit periods can extend up to as much as 365 days of overnight hospital stays over the lifetime of the policy]
POLICY OWNER AGE: 50+
TOTAL MONTHLY PREMIUM (with optional benefits): $100 - $110 per month
As mentioned, this is an example policy only. Exact rates will change as a result of policy holder age and the specific benefits selected. Several top companies offer these types of products and a specialist will compare them to determine the best option for you.
Comparing Costs & Care Options
While it’s important to explore all of your options, many alternatives to short-term care insurance are simply more expensive.
For example, the average cost of a one-bedroom assisted living facility is currently north of $50,000 per year, and this is expected to climb above $70,000 by 2030.
Skilled nursing costs even more, and home care costs can be equally daunting. To find out what your expected cost will be, check out our cost calculator below!
RELATED: Find Out the Cost of Care in Your State
The policy example above also doesn’t represent the full range of pricing options. Depending on your age, health condition, and benefits needed for things like rehabilitation, prescription drug benefits, and benefit restoration options, you could be paying more or less for your policy. It’s also important to remember that some medical costs will be covered by health insurance or Medicare, and factor this in.
While we can’t go through every possible situation, we hope that you now know both the benefit and the process for obtaining short-term care insurance.
Obtaining Short-Term Care Insurance
Hopefully by now you understand whether or not short-term care insurance is right for you. At LTC News, it’s our job to provide unbiased information to help you make the right health decision for you and your loved ones.
With the reminder that short-term care insurance isn’t available in all states, most states do offer it, and it’s offered in a variety of policy types.
Regardless, the best way to quickly find out both your eligibility and get the best policy for you is to find a trusted Long-Term Care Insurance specialist who can offer short-term policy options. At LTC News, we partner with specialists across the short-term and long-term care spectrum to provide you with the resources you need to make informed decisions.
You can get started in just minutes below and speak to a highly-trained expert, who will help guide you through the process to determine what solution is right for you. To get started, click below!
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