Long-term care insurance

Long-term care insurance covers the ongoing personal assistance people need when age, chronic illness, or cognitive impairment prevents them from living independently. Covered settings typically include skilled nursing facilities, intermediate and custodial care, assisted living, adult day care, and home health care. This is deliberately broad, because most long-term care is not medical treatment but help with everyday living.

Benefits are triggered by an assessment rather than by a diagnosis. Policies generally pay once the insured cannot perform a specified number of activities of daily living — commonly bathing, dressing, transferring, toileting, continence, and eating — or has a cognitive impairment such as Alzheimer's disease. The policy then pays a fixed daily or monthly benefit up to a stated benefit period, after an elimination period during which the insured pays out of pocket. Common riders include inflation protection, which increases the daily benefit over time, and a waiver of premium once benefits begin.

The gap this fills is significant. Medicare covers skilled nursing care only for a limited period following a qualifying hospital stay and does not pay for ongoing custodial care. Medicaid does pay for long-term care, but only after an applicant has spent down assets to state eligibility limits. Long-term care premiums rise sharply with issue age and can be affected by health at underwriting, which is why coverage is typically purchased well before it is needed.

Life and health licensing exams test long-term care thoroughly: benefit triggers, levels of care, elimination and benefit periods, inflation riders, and the boundary with Medicare and Medicaid. Medical assisting programs such as the CCMA cover it more briefly, in the context of identifying a patient's payers during insurance billing.