If you or a loved one cannot live independently, the costs of personal care can be very high. Long-term care insurance can help pay for the costs of personal care, but it’s important to understand how it is different from health insurance and when it can be useful.

What is long-term care insurance?

Long-term care insurance pays for personal care or services you might need because of an illness, disability, or cognitive impairment like Alzheimer’s disease.

It’s different from health insurance. Health insurance covers illnesses or injuries but will usually not pay for help with your everyday activities.

Personal care. Long-term care insurance pays for help with activities of daily living (ADL) such as eating, moving around, bathing, dressing, and using the bathroom. It can also help by paying for supervision, protection, or reminders to take medicine.

Skilled care. Long-term care insurance helps pay for skilled care from a nurse or therapist for those medical issues where you need a medical professional.

Where people get long-term care. Long-term care services can be at your home, in a hospice, adult day care center, nursing home, or assisted living facility.

Who might need long-term care insurance?

Long-term care can be expensive and long-term care insurance can help you pay for those costs. Consider your risks and whether you might need long-term care insurance before buying it, because it may not be right for you.

Consider your life expectancy.  Think about how long most of your family members have lived – have most lived for a long time? Women also usually live longer than men.

Consider your family’s health history. You might need long-term care if long-lasting or disabling health conditions run in your family.

Consider your need for personal care. If you have a spouse, adult children, or other family members who can take care of you at home, then you might not need a policy that pays for home care services. Instead, you might need a policy that pays only for nursing home care if receiving care at home is no longer possible.

Consider your finances. Consider your risk for needing long-term care and whether you can afford to pay for long-term care yourself. If you have savings or other sources of income that you do not want to spend on long-term care services, then long-term care insurance might be a good choice.

What does long-term care insurance cover?

Facility-based care. Long-term care policies can pay for nursing home care or assisted living care.

Home care. Licensed home health agencies provide health care services in your home, such as nursing care and physical therapy.

Adult day care. Licensed adult day care centers provide services such as nursing or therapy, social and educational activities, and personal supervision.

Additional services. Some policies will pay for hospice care, respite care to allow time off for family members who are caregivers, care after a hospital stay, help with household chores, or caregiver training for family members.

What does it not cover?

May not cover preexisting conditions. A company may refuse to sell a policy to someone who already has a condition such as Alzheimer’s. A long-term care policy may also delay coverage for a preexisting condition for up to six months after the policy goes into effect.

Mental and nervous disorders may be excluded. A long-term care policy can exclude coverage for certain mental and nervous disorders, but the policy must cover serious biologically based mental illnesses, brain diseases, and age-related disorders such as schizophrenia and major depressive disorders and Alzheimer’s disease.

Does not cover care by family members. Most policies won’t pay members of your family to take care of you. Some policies will pay to train your family members to be caregivers.

What are the costs?

The cost of long-term care depends on the kind of care, where the care is provided, and the type of care provider. Monthly costs for assisted living care or nursing home care are several thousand dollars so know how much a policy’s coverage will pay for different types of care.

Premiums are based on several factors. The premium, or amount you pay for long-term care insurance, will be based on factors such as your age, health, where you live, the amount and duration of benefits, and any optional benefits you may have added to the policy.

Premiums can increase as you get older.  Companies can raise the premiums on policies that don’t have fixed rates, but only if they do it to everyone with a similar policy in your rate class. Long-term care insurance is usually less expensive if you buy it when you’re younger.

Consumer Protections

Rates and Nonforfeiture Benefits. If your company raises your rate, they must let you know of the increase 45-days before the date the higher premium payment is due. If you can’t afford the price increase, the company must let you reduce your benefit to keep your payment the same.

Guaranteed Renewability. The insurance company must renew your policy each year unless you lied about your health, used all of your benefits, or failed to pay your premiums.

Refunded Unearned Premium. If you pay up front and cancel your policy, the company must refund any amount you already paid that hasn’t been used to buy coverage. The company can’t keep your money if they aren’t providing coverage for you any more.

Nonpayment Protections. A company cannot cancel a policy for not paying unless you haven’t paid the premium for at least 65 days past the due date. The company will also let you and a person you choose know if your payment is more than 30 days past due. You can reinstate a policy cancelled for nonpayment if you send proof that you didn’t pay premiums because of a mental or physical impairment.

Resources

Texas Department of Insurance

Texas Long-Term Care Partnership

Statutes and Rules

*⃣To learn more about health insurance, visit The Basics, Shopping Guide, and Using Your Insurance sections of our website.