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Jumping Ship: Should You Ditch Your Long-Term Care Insurance?

Is long-term care insurance the right choice for you? Our expert gives the rundown below.

By Lynne Giacobbe

Lost in the headlines around inflation and oil prices is yet another financial strain, this one focused on older Americans— premiums on long-term care insurance (LTCI), which for some are spiking.

Lynne Giacobbe has served as chief executive officer of Kendal at Home, a nonprofit pioneer of aging in place, since its inception in 2003. Lynne has worked in the nonprofit field for more than 30 years. For the past 25 years, she has worked in the area of administration and program development. Lynne is the chief executive officer of Ohio’s first age-in-place community. Through the development of Kendal at Home, which has recently expanded to Massachusetts, Lynne has helped to bring the concept of aging in place to older adults who prefer to spend their retirement years in their own homes.

Lynne Giacobbe 

Long-term care insurance is designed specifically to cover the cost of home care, assisted living, and nursing home care for those who can’t take care of themselves. Nearly 70% of those over 65 will need such care at some point in their lives – women for 3.7 years longer than men. One-third may never need long-term care support, but 20 percent of today's 65-year-olds will need it for longer than 5 years.

Recent LTCI premium increases, some reportedly approaching 300%, are related to factors beyond simple inflation. These factors include the rising cost of care, longer lives, and other flawed assumptions on which coverage is based.

Many policyholders are being offered buyouts as an option to a pending premium increase, reflecting the fact that many LTCI programs are chronically losing money. Concerns about these policies and how they work are pervasive: When can I receive LTCI benefits? What triggers reimbursement? What are the pros and cons of taking a buyout?

Only a trusted adviser can make the call about any buyout decision, but here’s some clarification on some points about LTCI, specifically the gaps between LTCI and a continuing care or life-care-at-home program.

It’s Money, Not a Program

LTCI is intended as financial protection just like any other kind of insurance. It’s not to be confused with a continuing care program or life-care-at-home program (also known as a “continuing care retirement community without walls”). These care programs coordinate both the payment and management of your care as you age. In a true care program, integrated services may include nutritional support, home health care, transportation, emergency response, care coordination, and much more depending on your needs.

“Think of long-term care insurance as a big pot of money you’ve been paying into,” says Brad Paulis, a partner at Continuing Care Actuaries. “You want to keep that assurance if you need to, and you certainly don’t want to throw away the value. But understand that if you are enrolled in a good continuing care program, you get a lot more than what LTCI promises.”

The Planning Gap

Although LTCI reimburses you for covered payments you’ve made for qualified services, it doesn’t include comprehensive advice and planning for the care you will need as you age. These are services you do receive in a continuing care or life-care-at-home program.


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Elimination Period

The is equivalent to a deductible. With most long-term care insurance policies, you need to pay for your own care for the first 60, 90, or 100 days of need. So, if you were to break a leg and need help eating, bathing, toileting, changing clothes, etc., you must pay for it out of pocket until the elimination period is over. It’s possible that by the end of the elimination period, you’ll have healed and resumed your normal life even though you’ve received no benefits. It’s also possible that you’ll have received less than adequate care during the elimination period and your illness or injury will have worsened into a chronic issue. In continuing care or life-care-at-home programs, services begin on day one of your need and don’t expire.

Proof of Need

To qualify for payment under long-term care insurance, you typically need to prove your inability to perform two or more activities of daily life (ADLs) such as eating, bathing, toileting, dressing, moving from one place to another, etc., before you’ll trigger coverage. You will need doctors’ statements documenting your disabilities, and the definitions can be restrictive.

Expect to be challenged. For example, if you can manage to get a spoon from a bowl to your lips, you’ll likely be considered able to eat in the context of a long-term insurance claim. But as everyone well knows, eating requires grocery shopping, kitchen organization, prepping, cooking, and plating as well as getting the spoon to your lips. A proper continuing care or life-care-at-home program protects you from LTCI’s loopholes.

Care Coordination Semantics

Insurers claim to provide care coordination, but often that boils down to taking your call, explaining the terms of a policy you’ve been paying for, and maybe dropping by your home to look over your environment after your elimination period has ended. Care coordination in the truest sense is an important, very personal job that involves one-on-one planning, scheduling, monitoring, paying, coordinating, assessing, and managing care, which is something you’ll get with a good continuing care or life-care-at-home program.

Payment vs. Reimbursement

Insurers don’t pay for care as much as reimburse you for charges you’ve incurred. The claims process often requires patients to submit extensive paperwork when they’re least able. A continuing care or life-care-at-home program coordinates and pays for the care from the onset of need.

In sum, long-term care insurance is a financial instrument not to be confused with a comprehensive set of services like a continuing care retirement community or life care at home.

So, do you want to keep your LTCI? That’s up to you and your financial counselor. But if you’re enrolled in a continuing care or life care at home program, you may be paying too much for duplicate coverage. You might want to take the LTCI buyout (assuming it’s fair), reduce your premium, or use your LTCI policy to defray your care program costs.

Just understand that LTCI is about reimbursement if you can prove you qualify for it. A care program is about keeping you well and giving you options to do just that.

About the Author: Lynne Giacobbe 

Lynne Giacobbe is CEO of Kendal at Home, a nonprofit pioneer of aging in place, since its inception in 2003. Lynne has worked in the nonprofit field for more than 30 years. For the past 25 years, she has worked in the area of administration and program development. Lynne is the chief executive officer of Ohio’s first age-in-place community. Through the development of Kendal at Home, which has recently expanded to Massachusetts, Lynne has helped to bring the concept of aging in place to older adults who prefer to spend their retirement years in their own homes.


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