Getting the most from your long-term care insurance policy

Retirement should be a carefree time when you enjoy life more and worry less. If you own a long-term care policy, you’ve already eased some of the biggest worries many retirees have—how to pay for nursing home or in-home care down the road and how to avoid being a burden to loved ones. According to a major study,1 52% of people turning age 65 will have a “high need” over their lifetime for long-term care.
Although your premiums may be costly now, owning a long-term care policy may save you and your loved ones thousands, or even hundreds of thousands if you receive benefits from a claim. A 2018 Genworth survey revealed the annual median cost for an assisted living facility is $48,000; the cost for a semiprivate room in a nursing home, $89,297; and the cost for a home health aide, $50,336.2
Here are some tips so you can plan ahead and get the most from your policy’s benefits:

Understand when your benefits become available and who can provide care

In general, you’re eligible for benefits once you meet the following conditions:
  • You’re unable to perform at least two of six basic activities of daily living (such as bathing, dressing, walking, or preparing meals) or you show signs of severe cognitive impairment.
  • Your doctor or another medical professional certifies that they expect your condition to last 90 days or longer.
  • You’ve personally covered the cost for long-term care services during your policy’s waiting period—typically 90 days.
Another key factor to keep in mind is who will provide your care. Although your policy probably covers home care, assisted living and nursing home care, the caretakers who provide those services must meet specific insurance company rules. For example, if you want to hire your niece or a neighbor to come to your home to make your meals and get you dressed, your insurance policy most likely will not cover their fees.

If you want to stay in your home, modify it to make “aging in place” possible

Aging in place refers to the ability of elderly people to live in their preferred residence with access to the things they need and the comforts that are important to them. Remodeling your home, or perhaps moving to a single-floor home that includes features you may need someday, can increase the likelihood that you can receive in-home care rather than transitioning to a nursing home or assisted care facility. Consider things like the width of your doors for wheelchair access and equipping your bathroom for ease in getting in and out of your shower. For more information or professional help, contact a Certified Aging-In-Place Specialist (CAPS), a certification of the National Association of Homebuilders (NAHB).

Find out if your policy excludes any medical conditions

Some long-term care policies carry exclusions for pre-existing conditions, which may not be covered until six months or a year after a policy is in force. You’ll want to be prepared if this situation applies to you.

Be mindful of inflation’s effect on your daily benefit

If you purchased your policy with a $150-per-day benefit, for example, by the time you actually use it the average per-day price in a nursing home could be $300 due to inflation. Check your policy to see if it includes inflation protection, and if so what kind. Some policies automatically increase your benefit amount by 5% compounded annually, keeping pace with the rising cost of care. These features increase the cost of the policy, but premiums most likely will not increase.
Your policy may include a future-purchase option, which allows you to buy additional coverage periodically without a medical exam. But be aware such policies may end up costing you more because the increased benefits are generally priced at your age when you buy the extra coverage, not the age at which you purchased the policy.

Be prepared emotionally and financially

Regardless of your health today, the likelihood you’ll need long-term care at some point in your life is real. Even though you’ve taken steps to prepare financially with a long-term care policy, you should also prepare emotionally by making your loved ones aware of your wishes and what your policy covers.
If you need help factoring future healthcare costs into your overall retirement plan, contact your TIAA advisor or a TIAA financial consultant by calling 888-583-2535, weekdays 8 a.m. to 7 p.m. (ET).
1 NAIC (National Association of Insurance Commissioners) and the Center for Insurance Policy Research, The State of Long-Term Care Insurance, May 2016.
2 Genworth Cost of Care Survey, 2018.
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