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www.insurance.wa.gov
A consumer’s guide to:
Buying long-term
care insurance
And other ways to pay for long-term care
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Washington State Office of the Insurance Commissioner
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Washington State Office of the Insurance Commissioner
No one likes to think about the prospect of needing long-term care. However, as life expectancy
continues to rise, more and more Americans between the ages of 40 and 84 – especially those in
their mid 50s – will start to prepare for their older years.
Long-term care refers to a wide range of medical, personal and social services. You may need this
type of care if you have a prolonged illness or disability. It includes help with daily activities, such
as dressing, bathing, eating, toileting, getting in and out of a bed or chair, and walking. It also may
include home health care, adult day care, nursing home care or care in a group living facility.
This kind of care is sometimes paid for privately (out of pocket) or through insurance. Often, it’s a
combination of both. See page 5 for other ways to pay for long-term care.
Long-term care insurance is one way to pay for long-term care. It’s designed to cover all or some
long-term care services. Long-term care insurance may consist of an individual insurance policy,
or group coverage including a master policy and certificates of insurance. These policies pay for
certain services once your claim is approved.
What long-term care insurance policies cover
Long-term care insurance pays for care generally not covered by regular health insurance or
Medicare. Long-term care insurance can help you protect assets and retain more control over your
health care decisions later in life.
If you cannot afford to pay out-of-pocket for long-term care services or you choose not to buy long-
term care insurance, Medicaid may be an option for you.
When do long-term care insurance benefits start?
Long-term care policies include an elimination period. This is the number of days that you’ll be
financially responsible for your own care before your benefits start. Elimination periods can range
from zero to 180 days. Shorter elimination periods generally cost more.
Also, long-term care policies do not guarantee coverage unless you satisfy certain requirements.
These are called “benefit triggers” and they vary by policy. For example, most policies will not
provide coverage until you’re unable to perform a given number of daily living activities, such as
dressing, bathing, and eating without help. Make sure you know what the “benefit triggers” are in
your policy.
How much does long-term care insurance cover?
Long-term care insurance provides a daily benefit, which is the maximum daily amount your
insurance policy will pay in any single day for your care. The daily benefit may include room and
board, home care, adult day care, hospice, respite care, etc. It can vary based on the dollar amount
you select when you buy your policy and the type of care you end up receiving.
You also can choose a benefit period that is a specific number of days, months or years. A
maximum benefit period may range from one year to the remainder of your lifetime. Be sure to
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Washington State Office of the Insurance Commissioner
ask your agent or broker if the benefit amounts will increase with inflation and if that increases
your premium.
Deciding if long-term care insurance is right for you
It might be right if:
• You have assets to protect, such as a home, savings, other investments, etc.
• You can afford the premium now and in the future.
• You’re not currently disabled or seriously ill.
• You’re unable to pay out-of-pocket for long-term care services and won’t qualify for
Medicaid.
• You want to ensure control over your assets.
• You want to protect your family from providing your long-term care.
It might not be right if:
• You have few or no assets.
• You’re unable to afford the premium.
• You’re already disabled or seriously ill.
• Your income and assets qualify you for Medicaid.
• You have other insurance, such as a life insurance policy with a long-term care rider,
another long-term care policy, etc.
• You can afford to pay out-of-pocket for your long-term care.
• You have no family or causes that you’d like to receive your assets.
Factors to think about before you buy long-term care insurance
• Age and life expectancy: The longer you live, the more likely you’ll need long-term care.
The younger you are when you buy the insurance, the less it costs.
• Gender: Women are more likely to need long-term care because they live longer and often
outlive their husbands.
• Family situation: If you have a spouse or adult children, you’re more likely to receive care
at home from family members. If family care is not available and you can’t care for yourself,
paid care outside the home may be your only option. Different policies may cover different
types of long-term care services. It’s important to buy a policy that will cover the type of
care you expect to need and that’s available in your area.
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Washington State Office of the Insurance Commissioner
• Health status: If chronic or debilitating health conditions run in your family, you could be
at a greater risk than another person of the same age and gender.
• Income and assets: You may choose to buy a long-term care policy to protect your assets.
On the other hand, a long-term care policy is not a good choice if you have few assets or
limited income.
• Stability: You’ll want to research the stability of the company you are thinking about
buying from. And be aware that all plans must comply with state consumer protection laws.
For more information about these laws, call our Insurance Consumer Hotline at 1-800-562-
6900.
• Cost: Long-term care insurance is expensive and insurance companies can raise
premiums, which will increase your costs over time - and past history indicates that
premiums will likely rise. Be sure to ask about the company’s history of premium increases
for all long-term care policies, not just the one you’re considering buying. Here are also
some options you may want to consider to keep costs down:
• Reduce your daily benefit amount. This is the maximum dollar amount your
insurance will pay in any single day.
• Reduce the benefit period duration. This is the length of time your policy will pay
for your care. For example, decrease the period from five years to two.
• Increase the elimination period. This is similar to a health care deductible. It’s the
costs you are responsible for during the first 20 or 100 days before your policy starts
paying.
• Reduce the amount of your optional inflation protection. The purpose of
inflation protection is to keep pace with the increased costs of long-term care
services. It’s an extra cost and it can be expensive.
• Choose the nonforfeiture option. If you’re worried about being able to afford the
premium in the future, ask your agent about a nonforfeiture value before you buy a
policy. This option prevents you from losing everything if you cancel your policy or
for some reason, you don’t pay the premium when it’s due. This benefit costs extra,
but provides reduced coverage should you fail to pay the premium.
What’s excluded in a long-term care policy
All policies include limits and exclusions. Before you buy, make sure you review this section in your
policy. Policies sold in Washington state may exclude coverage for the following:
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Treatment for pre-existing conditions or diseases
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Treatment for alcoholism, or drug addiction*
•
Conditions due to serving in the armed forces
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Illnesses caused by an act of war (whether declared or undeclared)*
•
Self-inflicted injuries or conditions due to attempted suicide*
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Washington State Office of the Insurance Commissioner
•
Conditions caused by participating in a felony, riot, or insurrection
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Benefits provided under state or federal workers’ compensation, employer’s liability or
occupational disease law, or any motor vehicle no-fault law
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Services outside the U.S. or its territories
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Treatment provided in government facilities (unless required by law)
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Benefits provided by Medicare or other government programs (excluding Medicaid)*
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Treatment due to an airplane accident (applies only to non-fare paying passengers)
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Services performed by a member of the covered person’s immediate family
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Services for which there is no charge
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Expenses for services or items covered or paid for under another long-term care
insurance or health insurance policy
In addition, all policies also exclude mental or nervous disorders or diseases, other than
Alzheimer’s disease or other dementia.
* These also are excluded by most policies sold nationwide.
Long-term care insurance
The cost of long-term care insurance varies according to the amount of coverage you buy, the
options you select, and how old you are when you buy the insurance. Your premiums will likely
increase over time. This type of insurance is not the best fit for everyone. It is very expensive for
older buyers. Before you buy, make sure you can afford it now and in the future, and then shop
around. Look at all of the options each policy offers. If you decide to buy a policy, choose one that
best meets your changing needs.
Key points to remember
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Long-term care insurance policies cover a wide range of medical, personal and social
services.
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Be aware of what conditions you must meet before a policy starts to pay benefits.
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Understand the elimination period (the number of days you’re financially responsible
for covered services before your benefits start).
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Understand the daily benefits provided.
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Know what’s covered and what’s excluded.
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Match your need for long-term care with your need to protect your assets and your
ability to pay premiums.
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Understand how much premium you must pay and how often you must pay it.
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Be aware that your future premium will likely increase.
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If you cannot afford the premium, you may lose your coverage. Make sure you know if
the policy offers a reduced premium for less coverage.
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Washington State Office of the Insurance Commissioner
Limited long-term care insurance
Some insurance companies offer payment options that allow you to pay premiums for a limited
period of time, rather than over the life of the policy. Instead of paying premiums as long as the
policy stays in force, you make payments for a predetermined number of years or up to a certain
age. Common examples include:
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Singlepay – one premium payment
•
Tenpay – pay premiums for 10 years
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Twentypay – pay premiums for 20 years
•
Toage65 – pay premiums until you turn age 65
You can use cash, certificates of deposit (CDs), annuities, or other resources to buy a limited pay/
long-term care policy. For example, if you buy a policy that offers a single premium payment, you
are guaranteed no additional premium charges. The policy includes a set amount of money for
your long-term care needs. The longer you have the policy and don’t file a claim, the more money
you will have for your future long-term care needs. These policies also pay a death benefit to your
heirs (family or friends).
Check with your insurance agent about different long-term care insurance options.
Other ways to pay for long-term care
Washington state Long-Term Care Partnership Program
This program provides you with another option to help pay for long-term care costs. It helps you
avoid spending down or transferring assets so you qualify for Medicaid when you need help with
daily activities, such as dressing, bathing, eating, etc.
How it works
OffersyouMedicaidassetprotectiononadollar-for-dollarbasis.
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Medicaid asset protection protects most assets you have – up to the amount of benefits
paid under the policy.
Example: If the Partnership policy paid $200,000, Medicaid would allow you to keep the
$200,000 in assets and you’d still qualify for government help to pay for care as long as
you meet all other qualifications.
Protectsyouagainstinflationifyou’re:
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Under age 61 when you buy the policy, it’ll provide annual compounded inflation
increases for benefits to cover the cost of your care.
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Between age 61 and 76, the policy will provide simple inflation increases.
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Over age 76, the policy might provide inflation increases.
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Washington State Office of the Insurance Commissioner
Protectsyourassetsinotherstates
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If you buy a Partnership policy in Washington state, it’ll help protect your assets in
other states too.
•
Washington’s a participant in the national “reciprocity” agreement with other states.
This agreement allows Washington state Partnership policyholders to move to another
“reciprocity” state and receive dollar-for-dollar asset protection. Similarly, Partnership
policyholders from other reciprocal states can move to Washington state and remain
protected.
•
Without a reciprocity agreement, your long-term care policy is portable, but the asset
protection features are not.
For more information on the Washington state Long-Term Care Partnership Program, go to:
www.insurance.wa.gov/your-insurance/long-term-care/.
Medicaid
As an older adult, you may qualify for Medicaid. This federally-funded program pays for almost half
of the country’s long-term care bills. To qualify for a Medicaid program, your monthly income and
assets must meet certain limits.
Medicaid will cover you in Medicaid-approved nursing homes that offer the level of care you need.
Under certain programs, Medicaid will pay for home health care. For information on Medicaid and
its program eligibility requirements, contact your local Home and Community Services (HCS) office
in the county you live in. To find your local office, call 1-800-422-3263, (TTY) 1-877-905-0454 or go
to: https://www.dshs.wa.gov/altsa.
Personal savings
You can use your savings or other personal resources to pay for long-term care. Personal resources
could include money in a checking or savings account, stocks, bonds, investments, life insurance
policies, pensions and income. Your family also may want to give you money towards your long-term
care needs. If you choose this option, you should plan ahead before you need long-term care. Make
sure you think about all of your future health care needs and costs. Long-term care is very expensive.
This option may be practical for people with above-average resources or a family commitment to
help with care. Ask a financial planner or elder law attorney about your options.
Accelerated Death Benefit (ADB)
This is a benefit you can add to your life insurance policy. It provides cash advances against your
death benefit while you’re still alive. You can use this benefit if you have a terminal illness, need
nursing home care permanently, or can’t perform activities of daily living for yourself. There might
be spending limits on these policies. Check this out with your agent or broker before you buy one.
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Washington State Office of the Insurance Commissioner
Life settlement
You may be able to sell your life insurance policy to a third-party company for a one-time cash
payment that’s greater than the policy’s cash value, but less than the death benefit. The amount is
based on your estimated life expectancy. If you’re terminally or chronically ill, the company will
offer you a greater amount for the policy. You can use the proceeds (which may be exempt from
federal income taxes) to pay for long-term care needs. Talk to your insurance agent or financial
planner to decide if this is the right option for you.
Reverse mortgages
This is a special type of home loan that gives homeowners the ability to change home equity
into cash. However, unlike a traditional home equity loan or second mortgage, no repayment is
required until you (the borrower) no longer use your home as your principal residence. To get a U.S.
Department of Housing and Urban Development (HUD) insured reverse mortgage, you must:
•
Be age 62 or older;
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Own your home outright, or have a low mortgage balance that you can pay off at the
closing with proceeds from the reverse loan; and
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Live in the home.
For more information about reverse mortgages, visit the HUD website at: www.hud.gov. To decide if
this will work for you, talk with a financial planner to understand the advantages and disadvantages
of this option.
Continuing Care Retirement Communities
Continuing Care Retirement Communities (CCRCs) provide housing, health care and social
services. In the same community, there may be individual homes or apartments, an assisted living
facility and a nursing home. Where you live depends on the level of care you need. The monthly
maintenance fee usually ranges from $650 to $3,500 and may increase from year to year due to
inflation. CCRCs also include buy-in or entrance fees that range from $38,000 to $500,000. The fees
vary based on:
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Whether you own or rent living space in the CCRC
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The size and location of your residence
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The amenities you choose
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If the living space is for one or two people
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The type of service plan you choose
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Your current risk for needing intensive long-term care
Some CCRCs offer a “life care contract.” This means that if you need care in the assisted living
facility or in the nursing home, you are guaranteed to pay the same entry fee and monthly fee as
someone who lives in an individual home or apartment.
To find out if a CCRC is accredited and to get advice on selecting this type of long-term care, visit
the Commission on Accreditation of Rehabilitation Facilities website at: www.carf.org/.
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Washington State Office of the Insurance Commissioner
Veterans’ benefits
The Department of Veterans Affairs (VA) may provide long-term care for service-related disabilities
or for certain eligible veterans and their spouses. There might be a waiting list for VA nursing homes.
To get information about available services in your area, call Veterans Affairs at 1-800-827-1000.
Medicare
Medicare generally pays very little for long-term care costs. If you meet certain conditions, Medicare
will help pay for skilled nursing or home health care. To find out if you qualify for help under
Medicare, use the online Medicare Eligibility tool at: www.medicare.gov. To apply for Medicare,
contact the Social Security Administration at 1-800-772-1213 or go online at: www.ssa.gov.
Resources
Long-term care
The Office of the Insurance Commissioner can answer long-term care questions and help solve
issues with current long-term care policies.
Insurance Consumer Hotline: 1-800-562-6900
www.insurance.wa.gov
BenefitsCheckUp® (BCU) provides a comprehensive, free, online service to screen for federal,
state, and some local public and private benefits for all ages. It also allows you to find out if you
qualify for other long-term care options.
www.benefitscheckup.org
The National Clearinghouse for Long-Term Care Information offers online interactive tools
such as a savings calculator, contact information for a range of programs and services, and real-life
examples of how other people have successfully planned for long-term care.
202-619-0724
www.longtermcare.gov
The Senior Information and Assistance National Elder Care Locator Service links you with
state and local area agencies on aging and community-based organizations that serve older adults
and their caregivers.
1-800-677-1116
www.eldercare.gov/Eldercare.NET/Public/Index.aspx
www.agingwashington.org and click on local Area Agencies on Aging
The Washington State Department of Social and Health Services, Adult/Senior Services
and Information helps you find in-home services, residential care (assisted living, nursing home),
resources to pay for care, benefits, legal and financial planning, and aging health information.
1-800-422-3263
https://www.dshs.wa.gov/altsa
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Washington State Office of the Insurance Commissioner
The National Association of Insurance Commissioners (NAIC), A Shopper’s Guide to Long-
Term Care Insurance helps you understand long-term care and the insurance options that can help
you pay for long-term care services.
1-816-842-3600
www.naic.org/index_ltc_section.htm
Financial planning
The National Association of Personal Financial Advisors provides resources and information
on how to find a financial planner.
1-800-366-2732
www.napfa.org/
The Financial Planning Association offers tools and resources for financial planning.
1-800-322-4237
www.fpanet.org
The American Institute of Certified Public Accountants (CPAs) offers tools, resources and
information on how to find an accredited CPA.
1-888-777-7077
www.aicpa.org/
360 Degrees of Financial Literacy offers general information for managing personal finances.
www.360financialliteracy.org/
Legal planning
The Washington Law Help website provides legal education materials and tools on topics such as
family law, aging/elder law, health and government benefits.
www.washingtonlawhelp.org
The Washington State Bar Association website offers information on estate planning and elder
law, and a lawyer referral service.
www.wsba.org
Lawyer directory: https://www.mywsba.org/LawyerDirectory.aspx
The Washington State Medical Association provides several helpful booklets that answer
questions and supply standardized forms for advance directives, such as living wills, durable power
of attorney for health care and do-not-resuscitate orders.
www.wsma.org
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Washington State Office of the Insurance Commissioner
Coordinated Legal Education Advice and Referral (CLEAR), a program of the Northwest
Justice Project, helps low-income people in Washington state with legal information and referrals.
CLEAR Senior is a similar service for those age 60 or older, regardless of income level.
CLEAR: 1-888-201-1014, (TTY) 1-888-201-9737
CLEAR Senior: 1-888-387-7111
nwjustice.org/get-legal-help
Watch for fraud!
Make sure the investment professional you work with is licensed and does not have complaints
or disciplinary problems filed against him or her, or the firm. To find out, contact the Financial
Industry Regulatory Authority (FINRA) BrokerCheck Hotline at 1-800-289-9999 or go to:
www.finra.org/Investors/ToolsCalculators/BrokerCheck/index.htm.
Need more help? Call our Insurance Consumer Hotline!
1-800-562-6900
Our professional consumer advocates provide information about insurance and
investigate complaints against insurance companies and agents on your behalf. We
also offer individual counseling and group education on health care issues in your
communities. Our highly trained Statewide Health Insurance Benefits Advisors (SHIBA)
volunteers can help you understand your rights and options about health care coverage,
prescription drugs, government programs and more.
SHP824-2170-OIC-Guide-Long Term Care-11/15
Visit us at:
www.insurance.wa.gov
