More than 7 million Americans have long-term care insurance today, according to insurance industry data. Many older adults purchase these policies to prepare for a time when they may be unable to perform daily living activities due to chronic illness, disability, or cognitive impairment.
But for many, that policy doesn’t work quite as expected. Maybe you already have long-term care insurance and have discovered its limitations firsthand. Or maybe you’re evaluating your options and wondering whether it’s the right fit for your long-term financial plan.
Either way, it’s important to understand that long-term care insurance is just one piece of the puzzle and to be strategic about where it fits in the overall picture of your financial plan as you age. Long-term care insurance can help pay for care (although often with waiting periods or qualifiers based on activities of daily living), but it doesn’t help you find, coordinate, or manage it.
Consider Marsha, an elderly woman living independently, who experienced a rupture in her Achilles tendon. She purchased a long-term care policy because she had no children, only a nephew who lived far away and wouldn’t be able to care for her in an emergency.
After her injury, she struggled to care for herself. She couldn't drive, dress, or bathe without assistance. She couldn't do her own laundry or prepare her own meals. She contacted her insurance company to file a claim for long-term care and ran into what's known as the elimination period, a waiting period between the start of a disability and when insurance begins paying benefits.
For Marsha, that elimination period was 90 days –– three months from the date of her injury.
If she still needed care after that, she could call the insurance company again to request benefits and they would send someone to assess her needs. They would need to determine if she had severe cognitive impairment, or if she could perform activities for daily living, like bathing, dressing, toileting, transferring, mobility, and eating.
In scenarios like Marsha's, insurance assessors are not necessarily evaluating whether someone can drive to the store, buy groceries, and prepare their own meals, but rather if someone can physically feed themselves. Since she was able to do that, she didn’t qualify for benefits, despite the fact that her mobility was limited and she still needed help.
Marsha's experience is common because long-term care policies tend to only provide catastrophic coverage.
These types of policies typically only activate in extreme circumstances, which often leaves a gap in care coverage when a person is injured or ill. Policyholders have to pay out of pocket for any care expenses incurred during this gap period.
In this post, we'll explain what long-term care insurance is appropriate for, how it works, and when to seek additional solutions to create a more holistic care plan.
What Is Long-Term Care Insurance?
Long-term care insurance is a type of insurance that helps cover the costs of care when an individual is no longer able to perform daily living activities, often due to chronic illness,
disability, or cognitive impairment such as dementia.
The insurance policy begins to pay benefits after a waiting period, also known as the elimination period, which can range from 30 to 365 days, with a 90-day elimination period being the most common.
When evaluating policies, it is essential to assess your financial situation and determine how much you can afford to pay on your own before benefits begin. In other words, would you be able to afford to pay for your care expenses out of pocket for 90 days if you had an injury or illness?
About Long-Term Care Elimination Periods
An elimination period is the waiting period after an injury occurs or disability is diagnosed and before an insurance policy begins to pay benefit, acting like a deductible measured in days rather than a dollar amount.
A longer elimination period may result in lower premiums, but it also means paying more out of pocket for care before benefits begin. A shorter elimination period may result in higher premiums, but it will also typically pay benefits sooner and reduce how much you’ll pay out of pocket.
Elimination periods vary across insurance providers and individual policies, so as you evaluate your options, consider which policy offers the most affordable premium with the most reasonable elimination period to match your financial situation. Your income, expenses, and savings will all be factors in choosing the right policy and elimination period.
Types of Elimination Periods: Calendar Days, Consecutive Days, Service Days
There are different types of elimination periods, including calendar day, consecutive day, and service day elimination periods, which affect how the waiting period is counted.
- A calendar day elimination period counts every day of the week, regardless of how many days care is received.
- A consecutive day elimination period requires a certain number of days of care to be received consecutively before benefits begin.
- A service day elimination period only counts days when care is actually received.
Some policies may offer a 0-day elimination period for home care, which will pay benefits immediately, while others may have a longer elimination period for facility care.
Carefully review policy terms and conditions to understand how each calendar, consecutive, and service days are defined and applied.
Reimbursement Challenges and the Role of Care Coordination
In addition to elimination periods, most long-term care insurance policies operate as reimbursement products. That means individuals must first pay for care upfront, find qualified providers, and submit detailed care notes and documentation to receive reimbursement.
If those care records are incomplete or not submitted correctly, benefits can be delayed or denied – something that can create major financial and emotional strain during an already stressful time.
For older adults who may be experiencing cognitive or mobility challenges, managing this process can be overwhelming. If someone is struggling with memory, coordination, or daily activities, how will they manage all the paperwork and claim requirements?
This is one of the many areas where Kendal at Home’s Care Coordinators make a difference. They help members identify qualified care providers, manage care documentation, and ensure claims are properly filed and tracked from the very beginning.
Finding the Right Long-Term Care Coverage
As noted above, finding the right coverage plan for care as you age requires careful consideration of both your individual needs and financial situation.
It’s essential to review and compare policies, and consider important factors such as elimination periods, premium costs, and benefits, as well as the reputation and financial stability of the insurance company, to choose the right fit for you.
It's also important to remember that for most people, one single policy or solution likely will not cover the range of care needs they will experience as they age, so planning for those gaps in care with solutions like Kendal at Home can provide additional assistance when the unexpected happens.
Kendal at Home Closes the Gap on Long-Term Care
Kendal at Home offers services for older adults to live independently for as long as possible, providing the security of long-term care insurance with the personalized support of a dedicated care coordinator who gets to know you long before you need them and advocates on your behalf when care is needed. It’s lifetime care coverage that follows you.
For members who already have a policy, Kendal at Home can serve as a supplement. For others, it’s a trusted alternative that provides immediate coverage and ongoing support. Your plan goes where you go, and with our support, 98% of members remain at home.
For more than 20 years, we’ve been an alternative to senior living communities, backed by the longtime expertise of the Kendal Corporation and our faith-based values.
Learn more about how we can help by registering for an upcoming virtual seminar.
