What is long-term care?

Long-term care refers to services that you may need when you are unable to perform some of the basic activities of daily living without assistance, such as eating, dressing, and bathing. This might be as a result of a disability or a chronic illness such as Alzheimer's disease and Parkinson's disease, or from a serious accident.

What do long-term care services cost?

In 2010, the annual cost of a semi-private nursing home room in Oregon was about $78,500. A one-bedroom unit in an assisted-living facility cost about $44,000. Employing a home health aide to help with such activities as bathing and dressing costs about $21.50 an hour (from a licensed agency).

What is private long-term care insurance?

Long-term care insurance purchased from an insurance company is one way to help pay for long-term care services. In Oregon, long-term care insurance must cover in-home care in addition to nursing homes, assisted-living facilities, and adult foster care. The services covered by individual and group long-term care plans generally are not covered by private health insurance or Medicare. (Medicare may cover some limited short-term skilled nursing care in a facility or at home if certain conditions are met.) However, Medicaid pays for long-term care services in certain facilities and in a variety of settings, including in-home care. Contact your local Department of Human Services office to find out if you are eligible.

Who needs long-term care insurance?

At least 70 percent of people over age 65 will require some long-term care services. However, long-term care insurance isn't for everyone, although everyone should plan for his or her future long-term care needs. If you are on a limited income or you expect to have little or no retirement savings, long-term care insurance might not be right for you. Some people purchase long-term care insurance to protect assets and to have more choices about where and how they get services.

How many Oregonians have long-term care?

As of 2009, a total of 91,078 Oregonians had long-term care insurance.

How do you buy long-term care insurance?

• Individual policies: Most people buy individual policies from an agent.
• Group policies: Some employers offer group long-term care coverage. If so, such coverage could cost less.
• Association policies: Some associations let insurers offer coverage to their members.

Other ways to pay for long-term care

• Some people have life insurance plans that have accelerated or living benefits. This means that under some circumstances, part of the life insurance death benefit is paid to the policyholder for long-term care services.
• Some families set aside their own fund for long-term care services or rely on accumulated assets.

How much does long-term care insurance cost?

Costs rise with age and health, and vary greatly based on the coverage you select. In 2007, Americans paid the following approximate average amounts for long-term care plans:

• $2,000 per year at age 50
• $2,500 per year at age 65
• More than $3,000 per year for those age 70 and older

When should I buy long-term care insurance?

The younger you are when you first buy insurance, the lower your annual premium will be. Also, the longer you wait, the greater the chance that health problems could make you ineligible for long-term care coverage.

Are there tax benefits for having long-term care insurance?

Yes. Benefits paid under insurance plans are not taxed as income. Also, some or all of the premiums you pay may be deducted from federal and state income taxes as a medical expense if you meet tax rules for health expenses. You may also qualify for a tax credit. Check with a tax adviser on your eligibility for any tax benefits. Generally, employers who provide group long-term care insurance for their employees can also deduct as a business expense the contributions they make toward premium cost.

Will my premiums go up once I buy insurance?

Premiums may increase after you purchase insurance if the Insurance Division approves your company's rate increase request. When long-term care insurance first became available in the 1970s, insurers had limited information on how to price this type of insurance. Some have sought steep rate increases decades later as they realized more claims are being filed than were anticipated. In 2006, Oregon made changes that required insurers to price long-term care insurance more conservatively. However, there is no guarantee that the price will remain the same during your lifetime. Learn more here: http://www.oregonhealthrates.org/?pg=ltc_welcome.html

When will benefits be available under the insurance plan?

Long-term care insurance plans have an elimination period (also called a waiting period or exclusion period.) This period is the number of days you must need nursing home or home health care before your plan will pay for services. Shorter elimination periods have higher premiums. Also, your plan will not pay benefits until you satisfy certain requirements. Cognitive impairment or an inability to perform a given number of daily living activities triggers benefits. Bathing, dressing, eating, transferring (to or from bed or chair), toileting, and continence (bowel/bladder control) are examples of daily living activities. Most plans require a test to determine cognitive impairment.

How much will the insurance plan pay?

You select a daily benefit amount (for example, $100/day), which is the maximum daily amount the policy will pay for your care. If the care costs more, you pay the difference. Most plans let you choose from $50 a day to as much as $500 a day. Also, you may choose a benefit period that is a specific number of days, months, or years. A benefit period may range from two years to the remainder of your life. Ask the person selling the insurance if the benefit or premium amounts will increase with inflation. Some insurers offer discounts or other benefits for couples.

Are there exclusions?

Every insurance plan has an exclusion and/or limitation section that lists the services that are not covered or that have limits on coverage. Be sure to review the Outline of Coverage for the plan of insurance that interests you.

How do I find out which long-term care facilities or providers are licensed so my insurance plan will pay benefits?

Your insurance plan will describe the qualifications necessary for all providers.

What are partnership plans?

This type of insurance plan protects some of your assets if you ever apply for Medicaid. Every dollar that a partnership plan pays out in benefits is a dollar that isn't counted toward the resource limit if you apply for Medicaid and isn't subject to estate claims after you die. The Oregon Insurance Division website www.insurance.oregon.gov lists the insurers that sell these types of long-term care insurance plans. If you need help finding this list, contact a consumer advocate: 888-877-4894 (toll-free) or 503-947-7984 in Salem.

Any tips for evaluating long-term care insurance plans?

We offer some tips for people here: Shopping for Long-Term Care Insurance:

Can I switch insurance plans?

Some people are interested in replacing an existing insurance plan with a newer one with more benefits. However, you will likely have to undergo new underwriting (the insurers could decide not to sell you a newer plan based on your health). And, you will have higher premiums because you are older than when you bought your original plan.

What happens if I buy a policy in one state and later move and need benefits in a different state?

It depends on the type of policy you have. If you do not have a partnership policy, the insurance company cannot deny you benefits in your new state. If you have a partnership policy, the company may be required to pay benefits in some states but not others. These are called "reciprocal states." Here's a link to more information:

Where can I get assistance with finding long-term care services?

Oregon's Long-Term Care Ombudsman has information on selecting long-term care facilities. Oregon's ombudsman investigates complaints and advocates for improvements in care at these facilities. Visit www.oregon.gov/LTCO or call 800-522-2602 (toll-free).