Guide to Long-term Care Insurance
By: America's Health Insurance Plans
Guide to
Long-TermCare
About AHIP Insurance
America’s Health Insurance Plans is a national
association representing nearly 1,300 members
providing health benefits to more than 200 million
Americans. AHIP and its predecessor organizations
have advocated on behalf of health insurance plans
for more than six decades.
As the voice of America’s health insurers, our goal
is to advance a vibrant, private-public health care
system, one characterized by consumer choice,
product flexibility and innovation. We support
empowering consumers with the information they
need to make health care decisions, promoting
health care quality in partnership with health care
providers, and expanding access to affordable
health care coverage to all Americans.
AHIP’s mission is to effectively advocate for a
workable legislative and regulatory environment at
the federal and state levels, one in which our members
can advance their vision of a health care system
that meets the needs of consumers, employers
and public purchasers.
www.ahip.org
Providing health
benefits to over
200 million
Americans
1
Contents
What is long-term care?..........................................2
Are you likely to need long-term care?....................2
What does long-term care cost? ..............................3
Who pays the bills? ................................................4
Where can I get long-term care coverage? ..............5
What are the types of long-term care policies? ........5
What do policies cost? ............................................6
Will my premiums increase as I get older? ..............8
What do long-term care insurance policies cover? ..8
What is not covered? ..............................................9
What else should I know before I buy? ................10
What about switching policies? ............................12
What should I look for in a policy? ......................12
Before you buy ....................................................13
Long-term care policy checklist ............................14
HIPAA’s impact on long-term care insurance ......16
Tax treatment ......................................................16
Consumer protection standards ............................17
If you need help ..................................................19
America’s Health Insurance Plans
601 Pennsylvania Ave, NW
South Building · Suite 500
Washington, DC 20004
(202) 778-3200 · www.ahip.org
friends are the sole caregivers for 70 percent of elderly
people. A study by the U.S. Department of Health
and Human Services indicates that people age 65 face
at least a 40 percent lifetime risk of entering a nursing
home sometime during their lifetime. About 10
percent will stay there five years or longer.
The American population is growing older, and the
group over age 85 is now the fastest-growing segment
of the population. The odds of entering a nursing
home, and staying for longer periods, increase with
age. In fact, statistics show that at any given time, 22
percent of those age 85 and older are in a nursing
home. Because women generally outlive men by
several years, they face a 50 percent greater likelihood
than men of entering a nursing home after age 65.
While certainly older people are more likely to need
long-term care, your need for long-term care can
come at any age. In fact, the U.S. Government
Accountability Office estimates that 40 percent of the
13 million people receiving long-term care services are
between the ages of 18 and 64.
What does long-term care cost?
Long-term care can be very expensive and the real
amount you will spend depends on the level of
services you need and the length of time you need
care. One year in a nursing home can average more
than $50,000. In some regions, it can easily cost twice
that amount.
Home care is less expensive but it still adds up.
Bringing an aide into your home just three times a
week (two to three hours per visit) to help with
dressing, bathing, preparing meals, and similar
household chores can easily cost $1,000 a month or
$12,000 a year. Add in the cost of skilled help, such as
physical therapists, and these costs can be much
greater.
The average monthly fee assisted living facilities
charge is around $2,000. This includes rent and most
additional fees. Some residents in the facility may pay
significantly more if their care needs are higher.
2 3
What is long-term care?
Insurance is an important tool for protecting yourself
against risk. For instance, health insurance pays your
doctor and hospital bills if you get sick or injured. But
how can you help protect yourself against the
significant financial risk posed by the potential need
for long-term care services, either in a nursing home
or in your own home?
Long-term care goes beyond medical care and nursing
care to include all the assistance you could need if you
ever have a chronic illness or disability that leaves you
unable to care for yourself for an extended period of
time. You can receive long-term care in a nursing
home, assisted-living facility, or in your own home.
Though older people use the most long-term care
services, a young or middle-aged person who has been
in an accident or suffered a debilitating illness might
also need long-term care.
Beyond nursing homes, there is a range of services
available in the community to help meet long-term
care needs. Visiting nurses, home health aides, friendly
visitor programs, home-delivered meals, chore services,
adult daycare centers, and respite services for caregivers
who need a break from daily responsibilities
can supplement care given by family members.
These services are becoming more widely available.
Some or all of them may be found in your
community. Your local Area Agency on Aging or
Office on Aging can help you locate the services you
need. Call the Eldercare Locator at 800-677-1116 to
identify your local office.
Are you likely to need long-term
care?
You may never need long-term care. But about 19
percent of Americans aged 65 and older experience
some degree of chronic physical impairment. Among
those aged 85 or older, the proportion of people who
are impaired and require long-term care is about 55
percent. In the year 2020, some 12 million older
Americans are expected to need long-term care. Most
will be cared for at home. Family members and
Where can I get long-term
care coverage?
Although long-term care insurance is relatively new,
more than 100 companies now offer coverage.
Long-term care insurance is generally available
through groups and to individuals. Group insurance
is typically offered through employers, and this type
of coverage is becoming a more common benefit. By
the end of 2002, more than 5,600 employers were
offering a long-term care insurance plan to their
employees, retirees, or both.
Individual long-term care insurance coverage is a good
option if you are not employed, work for a small
company that doesn’t offer a plan, or are selfemployed.
Choosing a policy requires careful shopping
because coverage and costs vary from company to
company and depend on the benefit levels you choose.
What are the types of
long-term care policies?
Several types of policies are available. Most are known
as “indemnity” or “expense incurred” policies.
An indemnity or “per diem” policy pays up to a fixed
benefit amount regardless of what you spend. With
an expense-incurred policy, you choose the benefit
amount when you buy the policy and you are
reimbursed for actual expenses for services received up
to a fixed dollar amount per day, week, or month.
Today, many companies also offer “integrated
policies” or policies with “pooled benefits.” This type
of policy provides a total dollar amount that may be
used for different types of long-term care services.
There is usually a daily, weekly, or monthly dollar
limit for your covered long-term care