Long-Term Care Insurance: Is It for You?

Long-term care insurance (LTCI) is not for everyone. For one person, it can be a valuable, useful, appropriate product. For another person, it can be an inappropriate, ill-advised expenditure. You're smart to look at it from your individual perspective and situation.

To help deal with the complexity, we suggest that you think about LTCI in two steps. Let's take them in order:

1. Decide whether you should purchase LTCI. This will depend on your personal financial situation, goals and views.
2. Investigate and compare policies' coverages and features, and find the best match for your situation before you purchase. Spend time on Step 2 only if Step 1 indicates that LTCI makes sense for you.

Step 1
At our classes, we lay out the basics of how LTCI works. We also discuss things like the odds of needing nursing home care, costs of care in different settings, what it means to self-insure, premium costs, the ability of the insurance company to change the premium, and when to purchase (age matters). Then students examine important financial and personal considerations - from their own viewpoints and situations - and decide whether LTCI makes sense for them individually.

The considerations include:

• Could you afford the LTCI premiums - today and in the future?
• Would you or your spouse qualify to use the Medi-Cal program for nursing home care - today and in the future?
• Would using the Medi-Cal program be acceptable to you or your spouse?
• Do you have financial reserves you wish to protect?
• Would your financial reserves be adequate to cover your care costs - today and in the future?
• How do you feel about using your financial reserves for care costs - would you rather preserve all or a part for other uses (spouse, other heirs, etc.)?
• Would you feel more comfortable having LTCI to cover an unpredictable risk?

Step 2
If Step 1 tells you that buying LTCI makes sense for you, start evaluating and comparing multiple policies. Areas to examine include:

• What services are covered by the policy (nursing care, personal care, etc.)?
• What settings are covered - home, adult day care, assisted living, board and care, nursing home?
• What triggers coverage - and who gets to decide?
• What dollar amount (daily benefit) should you select?
• If only part of the daily benefit is used, what happens to the remainder?
• What about inflation protection?
• What is the financial strength of the insurance company?

More resources

• Attend one of H.E.L.P.'s classes on LTCI. For further background, attend our classes on care planning and Medi-Cal.
• Study the Consumer Reports November 2003 report "Do you need long-term-care insurance?" available online at www.consumerreports.org and at many libraries.
• Use "A Shopper's Guide to Long-Term Care Insurance" distributed by the National Association of Insurance Commissioners and available online at www.naic.org/consumer_home.htm or by phone at (816) 842-3600.
• In Los Angeles County, the Center for Health Care Rights provides individual counseling on long-term care insurance at community sites. Call them at (213) 383-4519.

July 2006