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Layin’ It on the Line: What expenses does long-term care insurance cover?

By Lyle Boss - Special to the Standard-Examiner | May 31, 2023

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Lyle Boss

Long-term care insurance typically covers costs associated with personal and custodial care in a variety of settings. Here are some examples of what a policy might cover:

1. In-home care: This includes assistance with daily activities such as bathing, dressing, eating, using the bathroom, moving around and medication management. It could also include various types of therapy provided at home such as physical, occupational or speech therapy.

2. Assisted living facilities: This coverage is for individuals who may need some assistance but do not require full-time nursing care. Services often include meals, medication management and help with daily living activities.

3. Nursing homes: Nursing homes provide around-the-clock skilled nursing care for those who are no longer able to care for themselves.

4. Adult day care services: These facilities provide daytime social and therapeutic activities for adults who need supervision during the day.

5. Respite care: This gives family caregivers a break by providing temporary care for an individual in their own home or in a health care facility.

6. Hospice care: This provides services for individuals who are terminally ill and focuses on pain management and emotional support.

7. Memory care for dementia patients: This includes specialized care for individuals with Alzheimer's disease or other forms of dementia.

8. Home modification: Some policies may cover changes to your home like ramps, grab bars and wider doorways to make it more accessible.

These are general categories, and the exact coverage can vary from policy to policy. Policies often have daily or lifetime dollar limits. Daily limits on long-term care insurance refer to the maximum amount the insurance company will pay for your long-term care expenses in a single day. This amount is specified in your policy.

For example, if your policy has a daily benefit limit of $200 and your actual long-term care costs for the day are $250, the insurance will only cover $200, and you would be responsible for the remaining $50.

This limit is set when you purchase the policy and often factors into the premium amount -- a higher daily limit would typically result in a higher premium. Some policies also have "lifetime limits" or "maximum policy limits," which cap the total amount the insurance company will pay over the life of the policy.

Inflation protection is another important consideration when it comes to daily limits. The cost of care is likely to increase over time due to inflation. Some long-term care policies offer inflation protection, which increases your daily benefit amount each year to help keep pace with the rising cost of care.

The premiums for long-term care insurance are not guaranteed to remain the same for the life of the policy. They can, and often do, increase over time.

Insurance companies set the initial premiums based on a variety of factors, including the policyholder's age, health status, the amount of coverage, and statistical assumptions about interest rates, mortality rates and the future cost of long-term care. However, if these assumptions prove to be incorrect, the insurer may need to increase premiums to ensure that they have sufficient funds to pay future claims.

Insurance companies can't increase an individual policyholder's premium based on their personal circumstances, such as their advancing age or declining health. However, they can increase premiums for a particular class of policies, subject to regulatory approval from the state Department of Insurance.

Be sure to read your policy thoroughly to understand the coverage it provides and any limitations or exclusions. Always consult with a knowledgeable professional or insurance agent for the best advice tailored to your specific needs.

Lyle Boss, a native Utahn, is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management. Boss Financial, 955 Chambers St., Suite 250, Ogden, UT 84403. Telephone: 801-475-9400.

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