Whether you are an adult child, a spouse, close friend, or a family member, there may come a time when you have to consider long-term care for an aging loved one. Depending on their needs, that care can take many forms — from assisted living to an at-home service agency like Home by Choice.

These services can become expensive, and if you are not prepared they can have a serious effect on a budget. When the time comes, long-term care insurance might be part of the answer. Here is what you should know to help your loved one make an informed decision.

What is long-term care insurance?

Long-term care insurance is not like traditional health insurance. It is meant to cover expenses associated with long-term senior care and support. A policy reimburses the policyholder a daily amount toward skilled nursing care, therapy, and services that help with the activities of daily living.

It was introduced in the 1980s as nursing-home insurance. Today it can apply whether the care is provided at home, in a skilled nursing facility, or another senior care setting. In many cases it is more for peace of mind than a financial investment. Help your loved one weigh the pros and cons.

Pros

Helps ensure aging loved ones get the care they need
Can ease stress on family and friends — emotional, financial, or otherwise
May provide financial security in a difficult season of life

Cons

Not everyone can qualify or afford long-term care insurance
Premium hikes can be common and considerable
The long-term care insurance market is in decline; fewer companies offer it each year

Who needs long-term care insurance?

The National Association of Insurance Commissioners estimates that 70 percent of people over the age of 65 will need some type of long-term care at least once. Even if your loved one is in good health now, it is worth planning for the chance they may need help later.

Whether they should buy a policy is often a question of income, assets, and retirement goals. If their only income in retirement is Social Security, they may qualify for Medicare or Medicaid and not need extra LTC coverage. If they have sufficient income or assets and do not want to pay for care entirely out of pocket, LTC insurance may be worth a conversation.

If you decide it is the right choice, the hard part is how to structure the policy. You would not want to pay for something you never use, or have it expire too early. Speak with a knowledgeable insurance agent.

What does it cover?

Every policy is different. Work with a licensed agent. In general, long-term care insurance can help pay for:

Companion services
Respite care
Assisted living
Hospice services
Specialized care
Necessary home modifications

Ask about the daily benefit, how many years benefits can be claimed, and whether the policy protects against inflation. A current health issue or pre-existing condition may disqualify someone. Underwriting standards change, and a licensed professional can help you navigate that.

What does it cost?

According to the American Association for Long Term Insurance, the industry average for a policy with a $150 daily benefit was just over $2,000 a year. That is costly for many people on a fixed income. Weigh it against the cost of paying for care out of pocket.

Genworth’s Cost of Care Survey for 2018 listed these average monthly costs:

Home health aide: $4,195
Adult day health care: $1,560
Assisted living: $4,000
Nursing home (private): $8,365

If your loved one wants insurance, it is wiser to look earlier. Getting a policy in your 50s or 60s is often less costly than after 65. Initial premiums were found to be 8 to 10 percent higher on average for new customers at age 65 than at 64. Shop around. Many agents offer policies from more than one company.

A last word

This is not exhaustive. We hope it gives you something to think about. Like any insurance, long-term care coverage has benefits and challenges. If you have questions about LTC insurance or in-home care, please contact us. We would love to hear from you.