Paul B. Bartlett, P.C.
Trusts & Wills
ALTCS - Medicaid
Guardian & Conservator
Lawyers - Tucson, Arizona

Long Term Care Insurance

Is there a significant risk that I am going to need long term care?

15% of all people who reach age 65 will have Alzheimer's Disease at that time.  By the time a person reaches age 80, he stands a 50% chance of having Alzheimer's Disease at that time.  And that is only one of many diseases that a person can acquire with age.  The vast majority of Alzheimer's patients need long term care, either at home or in an institutional setting.

How much does long term care cost?

In the Tucson metropolitan area, in 2022, the average cost of a nursing home bed is $8,029.46 per month.  The average cost of an assisted living center placement is $4,400 per month.  The average cost of a boarding home placement is about the same.

How much does it cost to be cared for at home?

$10,000 - $12,000 per month if an agency is supplying multiple workers on split shifts for full time care. Sometimes, a single live-in caregiver is found, and can be employed for about $9,500 per month.  However, in the case of a single live-in caregiver , there is a risk of caregiver "burnout", and the fatigue factor can imperil the life of the person being cared for.  So factor in an additional $2,500 per month in that situation for some weekend respite care.

Will Medicare pay the cost of long term care in a nursing facility or at home?

Medicare may pay for a period of confinement in a nursing home after a bout of acute illness, to a maximum of 100 days.  In the real world, receiving the maximum 100 days is contingent upon demonstrated progress towards recovery, though the law is written to qualify a patient for continuing benefits if the treatment prevents back sliding in the patient's condition.

If I am a veteran, will the VA pay for my long term care?

Here are the criteria used by the VA to answer this question:

  • Any veteran who has a service-connected disability rating of 70 percent or more;
  • A veteran who is rated 60 percent service-connected and is unemployable or has an official rating of "permanent and total disabled;"
  • A veteran with combined disability ratings of 70 percent or more;
  • A veteran whose service-connected disability is clinically determined to require nursing home care;
  • Nonservice-connected veterans and those officially referred to as "zero percent, noncompensable, service-connected" veterans who require nursing home care for any nonservice-connected disability and who meet income and asset criteria; or
  • If space and resources are available, other veterans on a case-by-case basis with priority given to service-connected veterans and those who need care for post-acute rehabilitation, respite, hospice, geriatric evaluation and management, or spinal cord injury

Will Medicaid pay for the cost of my long term care?

Yes, if you are sick enough and poor enough.  Go to our Medicaid Answers page for more details.   Relying on Medicaid may involve the following problems:

  • Limits on the amount of money available to a spouse.
  • Limits the range of care facilities to those that are ALTCS approved.
  • Some facilities that accept ALTCS patients require 2 years private pay.
  • Dealing with a bureaucracy if you need to change care facilities
  • Limitations on the ability to leave assets to your children.
  • Likelihood that there will be a lien placed against your home.
  • If you want to stay at home, ALTCS will only provide care 30 hours/week

What is long term care insurance?

A common type of long term care insurance pays a daily benefit when the individual is confined in a nursing home.  When the person buys his policy he selects the amount of the daily benefit.  The purchaser also selects the duration of coverage, which usually ranges from 2 years to lifetime.

Another type of long term care insurance policy is actually a special type of an annuity. The purchaser writes a check to an insurance company, let us say for $100,000. Like a normal annuity, the money will earn interest annually. But the annuity contract contains a clause that says that if the purchaser needs long term care, the insurance company will match the funds 2 for 1, i.e. there will be $300,00 to pay for long term care.

Some people prefer a long term care annuity policy because, if you never use it, you don't lose the money you invested.

Many long term care policies pay for care that the insured person receives at home, though the benefit for home care is often one-half of the daily benefit paid by the policy.  This is a strange paradox, because round the clock care in home is more than twice as expensive as custodial nursing home care, in most cases.  Never the less, a long term care insurance policy may make in-home care a viable option for seniors who want to remain at home.

Long Term Care Partnership Policy

The American Association for Long Term Care Insurance explains a "Partnership" policy as follows:

The Deficit Reduction Act (DRA) which was signed into law on February 8, 2006, included section 6021. This provision authorized states to offer special Medicaid asset disregards for persons purchasing and using qualified private long term care insurance policies -- which have come to be known as 'Partnership' policies.

The Long Term Care Partnership Program is a joint federal-state policy initiative to promote the purchase of private long term care insurance. The Partnership Program is intended to expand access to private long term care insurance policy to pay for long term care services.

Purchasing a Partnership-qualified (PQ) long term care insurance policy provides an added benefit. This benefit is described as “dollar-for-dollar” asset disregard or “spend down” protection. Individuals who purchase a PQ policy 'earn' one dollar of Medicaid asset disregard for every dollar of insurance coverage paid on their behalf.

Here's an example. Stephanie buys a PQ policy and needs care one day. Her policy pays out $150,000 of insurance claim benefits. Stephanie earns a Medicaid asset disregard that allows her to keep an additional $150,000 over the asset level she would otherwise have to meet in order to be eligible for Medicaid coverage. The Partnership Program also protects those assets after death from Medicaid estate recovery.

Should I buy long term care insurance?

Premiums for a long term care insurance policy generally tend to stay lower when you purchase the policy earlier in life, rather than later.  If you can secure a low premium, you may be able to afford long term care insurance without going on a diet of cat food.

A long term care policy may save you from having to rely on Medicaid.   It might give you access to a wider range of nursing home facilities, because you would not have to become a Medicaid patient immediately.  It might make in-home care a possibility.  If you have moderate wealth, it might even enable you to leave an inheritance to your children.  If you purchase a policy that is for a term of years, rather than for a lifetime, the policy will reduce dollar for dollar  the amount of any lien that Medicaid may file against your home property.

If you are married, you have an additional reason to purchase long term care insurance.  It may preserve your spouse's standard of living when you need long term care.

At what age should I purchase long term care insurance?

One reason to buy it in your 40's or 50's is that applications for long term care insurance go through an underwriting process.  This means that applicants with some medical conditions will be unable to purchase policies.  The earlier you purchase your policy, the less is the chance that you will develop a medical condition that will disqualify you.

Considering the total amount of premium that you will pay during your lifetime, it seems to work out mathematically that the optimal time to purchase long term care insurance is in your early 50's. 

There is no law that requires long term care insurance companies to lock in a premium for you depending upon the age you choose to buy the insurance.  However, the industry seems to behave in this way.

This assumes that your insurance company will act responsibly and set premiums that are neither too low or too high.  Premiums that are too low will not be sustainable over the life of your policy.  (If it sounds too good to be true, it definitely is in the long term care insurance business.)  Premiums that a company sets too high will make it more cost effective to wait a decade to purchase - so look at another company.

The younger you are when you buy  long term care insurance, the more careful you should be about looking into the long term financial viability of the company insuring you.  There are reliable publications that rate insurance companies for long term financial viability.  These include A.M. Best, Moody's and Standard & Poor's.

What kind of coverage should I purchase?

The earlier you buy coverage, the more strongly is it recommended that you purchase an inflation rider.  In the period between 1992 and 2000, nursing home charges doubled.  Your policy needs to keep pace.  There are two types of inflation riders: one with compound interest and one with simple interest.  The older you are, the more sense it makes to look at an inflation rider with simple interest because it is less expensive, and because it will, speaking mathematically, be as likely to keep up with inflation, if you use the policy in about 8 years.

You can usually lower your premium by making the coverage begin 30 or 60 or 90 days after first nursing home confinement.  If you want to economize on premium, choose the longer period.  The reason is that Medicare may pick up the bill during some or all of the first 100 days. 

You might consider buying a supplemental policy to cover that portion of in-home care that the basic nursing home insurance policy does not cover.  Such supplements are available, but you have to look.  They are less expensive than you might expect.

Should an elderlaw attorney review my long term care policy?

Yes.  This is a protection against being both oversold and undersold.  A long term care policy without an inflation rider may be next to worthless, and an elder law attorney can advise you if you should continue paying for it or not.  Sometimes, the selling agent fails to take into account that you will have income from other sources to pay for some of the daily cost of care, and so you can buy a more modest policy.

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