10 Things You Need To Know About Long-Term Care Insurance
How Long-Term Care Insurance Works
When you buy a long-term care insurance (LTCi) policy, you are purchasing the ability to receive benefit dollars to pay for qualified long-term care costs. New York Life’s long-term care insurance product, LTCSelect Premier is a reimbursement policy. We reimburse policyholders for qualified long-term care costs up to a maximum daily (and total) benefit amount. Applicants select their long-term care benefit amount at the time of policy purchase. Policyholders can continue to be reimbursed as long as they meet eligibility and have available benefit dollars.
The long-term care coverage provided by a given policy varies from one company to another. New York Life’s policy offers coverage for a variety of long-term care services, from home and community-based care, to assisted living facilities, to nursing home coverage. A variety of inflation protection riders, and other optional riders, can be added to a policy. Policyholders may become eligible for claim when they are unable to perform two or more of the activities of daily living without substantial assistance from another individual due to a loss of functional capacity, which is expected to last at least 90 days. Policyholders may also become eligible for claim if they have suffered a severe cognitive impairment.
Reimbursement begins once the claim is approved and the waiting period (which is selected by the policyholder at time of purchase) is met.
What is the best age to buy a policy?
Answer: There is not a single set age at which it is best to purchase long-term care insurance. Everyone’s financial situation is different, and people have various reasons for prioritizing the order in which they acquire financial and insurance products. Long-term care insurance from New York Life Insurance Company is available to applicant(s) aged eighteen to seventy-nine in most states. It’s a good idea to get long-term care insurance as soon as you can afford the coverage and at earlier ages, as you never know when you might need long-term care protection.
There are two primary factors to consider when deciding when to buy long-term care insurance:
- The cost of long-term care insurance generally increases with each year older you are when you purchase the policy. For example, a person who buys long-term care at age 55 will probably pay a higher annual premium amount than someone who purchases coverage at age 50. Keep in mind, too, that premiums are due annually (with most products).
- It is best to buy long-term care insurance when you are younger, healthier, and more likely to be approved for coverage.
Are long-term care services very expensive?
Long-term care services can be very expensive. Costs vary widely by region. Our 2014 cost of care study found that the average cost of a year’s care in a private Medicare-certified nursing home room was $95,706.65. Home health care services averaged $22 per hour.1 According to the most recent data in the National Association of Insurance Commissioners’ (NAIC) "A Shopper's Guide to Long-Term Care Insurance" brochure, a year in an assisted living care facility averaged $39,516 per year. It’s impossible to predict how long a person may need care. Using these average figures, just three years of assisted living plus two years of nursing home care could cost over $300,000.
Can health factors disqualify you from coverage approval?
There may be health concerns that limit your eligibility for LTCi. Applicants are underwritten and health and mental status can affect insurability or premium rates. The majority of applicants who apply for long-term care insurance coverage from New York Life are approved. A New York Life agent can help determine your ability to apply for long-term care insurance before you apply. It’s important to check with an agent before deciding whether or not to apply. Many health conditions would not cause you to be declined.
The Long-Term Care Underwriting Process
Unlike many other life and health related insurance products, the long-term care insurance underwriting process does not require a new medical physical or blood or urine sample collection. Depending on your age and employment status, New York Life may need to review your recent medical records and/or conduct a telephone interview. In some cases New York Life will conduct a face-to-face interview of an applicant. If you have questions about your insurability for long-term care insurance, a New York Life agent can conduct a pre-screening.
You Set Your Long-Term Care Insurance Premium
Premiums are determined by your age at time of purchase, the amount of coverage you purchase, the length of your waiting period, the inflation option you select, and any additional riders you purchase. Some people choose to designate a portion of their existing assets to a potential long-term care need and insure a small portion of their remaining potential long-term care risk, resulting in lower premiums. Others choose to buy larger, more substantial benefit pool policies. A New York Life Agent can help you make these decisions based on your specific needs.
Here are a couple of items about New York Life long-term care insurance premiums you should keep in mind:
- Premiums increase with age, so the younger you are when you buy a policy, the less you will pay in annual premiums and over your lifetime.
- If you're married, you will receive a 15% discount on rates where available by state.
- A "sibling discount" is available for siblings who reside in the same household and who both apply and are approved for coverage, where available by state.
- New York Life offers a three-year rate guarantee. While we have priced our long-term care insurance product with long-term rate stability in mind, we reserve the right to increase premiums on a class basis in the future.
- Our policy is a participating product (dividend eligible). Policyholders become dividend eligible after their 3rd policy anniversary. Dividends are not guaranteed.
- When considering long-term care insurance premiums, remember to weigh costs against the potential pool of benefit dollars available to you. When most people weigh the potential benefits in this manner, they realize long-term care insurance can be a ‘pennies on the dollar’ expenditure.
- Where available, New York Life offers an optional Return of Premium Upon Death Benefit Rider that you can add to your policy at the time of purchase. With the Return of Premium Upon Death Benefit Rider, all of the premiums you paid into the policy, minus any claims paid, may be returned to your estate after death.
The Tax Advantages of Long-Term Care Insurance
Tax laws at both the federal and state levels may provide incentives for individuals and businesses to purchase qualified long-term care insurance policies with the goal of decreasing the public’s reliance upon Medicaid and Medicare as resources for funding long-term care services. New York Life’s long-term care insurance policy is considered a “qualified” policy and may be eligible for favorable tax treatment, where available.
Federal tax deductions are sometimes available for individual, non-business owners who itemize medical expenses. Additionally, some states offer individual state-level tax incentives. For more information, click here to view the New York Life Tax Incentives and Long-Term Care Insurance overview for consumers brochure.2
The Government and Long-Term Care Coverage
Many people think the government will automatically pay all of their long-term care needs. The government pays for some long-term care services, but planning for the government to pay all of your long-term care costs may not be the best option for you.
- Medicaid – Medicaid is a government program that may pay for skilled nursing home services, and some home and community-based care for low income Americans who have spent most or all of their assets. To qualify, one has to meet federal and state guidelines for income and assets. Many people who are living in nursing homes entered the facility paying for care out-of-pocket. Once they spent enough of their assets that they met Medicaid eligibility requirements via asset “spend-down,” Medicaid began covering the cost of their care. Not all nursing homes accept Medicaid patients, and Medicaid can dictate which nursing home a patient will use. Individuals who are concerned with protecting assets, protecting retirement/financial plans, or want more control of the care they will receive, should not rely on Medicaid for their long-term care needs.
- Medicare – Medicare may cover up to 100 days of skilled nursing home care if certain conditions are met, but it's not designed to be a long-term care financing tool. Medicare does not pay for any homemaker services or home health aides or assisted living costs. You should not rely on Medicare for your long-term care needs. For more information on Medicare, click here for A Shopper's Guide to Long-Term Care Insurance.3
Long-Term Care Insurance and the State Partnership Program
New York Life is proud to participate in the State Long-Term Care Insurance Partnership Program. Long-term care insurance “partnerships” are an alliance between the private insurance industry and state governments and are intended to reduce future reliance on Medicaid as a funding source for individual long-term care needs. The state and federal governments are sending a message of personal responsibility to consumers who are wondering how to pay for long-term care.
Individuals who use the benefits of an LTCi partnership policy may not have to spend down as much of their assets to qualify for Medicaid.
Based on the partnership qualifying criteria, many of the policies we sell in eligible states will automatically qualify for partnership protection.
The LTCSelect Premier policy is currently certified as a qualified LTCi Partnership policy in 28 states: Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho, Iowa, Kansas, Kentucky, Maine, Maryland, Minnesota, Missouri, Nebraska, New Jersey, North Dakota, Ohio (including Franchise), Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota (including Franchise), Tennessee, Texas, Virginia, Wisconsin and Wyoming. Additional states will be added to this list in the future.
Click on the "Talk to Us" button to contact a New York Life Agent for more information. You can also refer to your state's Medicaid or Department of Insurance website for details on Medicaid eligibility.
Choosing New York Life Insurance to be Your Long-Term Care Insurance Carrier is a Good Idea
New York Life is well qualified to be a long-term care insurance provider. As a mutual company with the highest ratings for financial strength currently awarded to any life insurer by all four major ratings agencies4, we are well-positioned to withstand the market fluctuations that come with managing a risk pool over many decades. Unlike many of our stock company competitors, who tend to manage to the short-term concerns of Wall Street, our focus is always solely on the long-term, and the security of our policyholders. This cautious, forward-looking mindset should be considered a hallmark characteristic, if not a prerequisite, for long-term care insurers. This is because long-term care insurance is fundamentally a very long-term proposition, for both the policyholder and the insurer.
Ultimately, long-term care insurance is a 20, 30, 40-year or maybe more promise. If you are considering applying for New York Life long-term care insurance coverage, you are on the right path.Contact a New York Life agent to learn more about why choosing New York Life to be your long-term care insurer is a good idea.
The purpose of this material is solicitation of insurance. An insurance agent may contact you. Long-term care insurance is issued on policy form series ILTC-5000 and INH-5000 with a state identifier, where applicable and edition date. These policies may have exclusions and limitations.
12014 New York Life Cost of Care Survey.
2This information is intended to be accurate, but neither New York Life nor its agents are in the business of giving tax advice. You should consult with your own tax or legal professionals for advice on these topics relevant to your own situation.
3NAIC. A Shopper’s Guide to Long-Term Care Insurance. 2013. Page 3.
4For current New York Life Insurance Company financial strength ratings from the four principal ratings agencies see the "What the Ratings Agencies Say" article on newyorklife.com