Does Long-Term Care Insurance Cover Assisted Living?

Long-term care insurance can help older adults pay for the services and support they need as they age, whether they’re residing at home, in a senior living community, or in another type of setting.^[01] After qualifying for and purchasing a long-term care insurance policy, seniors can be reimbursed (up to a preselected amount) for care expenses in an assisted living community or another location.^[01]

Depending on where a senior receives long-term care, their policy might cover:

• Assistance with activities of daily living (ADLs)
• Skilled nursing care
• Dementia care
• Assisted living
• Speech, physical, occupational, or rehabilitation therapy
• Homemaker services (as long as the services are in conjunction with personal care)
• Respite care

Most policies have limitations and exclusions. Long-term care insurance might not cover services for the following:

• Certain mental and nervous disorders, excluding dementia
• Alcoholism or drug abuse
• Self-inflicted injury
• Care provided in a government facility or that the government has paid for ^[02]

How does it work?

Usually, long-term care insurance policies pay a predetermined amount to cover necessary services. A buyer typically chooses from a variety of benefits and care options that enable them to get services where they prefer.

Not all long-term care insurance policies last the same amount of time. In fact, many policies have limits on their duration and on how much they’ll pay. Though some policies do offer to pay long-term care costs for as long as a policyholder lives, it’s more common for them to last between two and five years.^[01]

There are three common types of long-term care insurance policies that may be used for assisted living:

• Individual policies. A majority of long-term care insurance policies are bought by an individual directly from an insurance agent.
• Group policies. An employer might offer long-term care coverage as part of a group plan in which the underwriting is often less stringent than for individual policies.
• Association policies. A non-employer association can let an insurer offer long-term care insurance to its members, and the policies are similar to individual policies.^[03]

Additionally, the Federal Long Term Care Insurance Program offers coverage to most federal and U.S. Postal Service employees, active and retired members of the uniformed services, and qualified relatives.^[04]

If your loved one has a life insurance policy, they may be able to add a long-term care rider, which is an add-on to their policy. It’s important to be familiar with the policy, however, as long-term care benefits are usually a portion of the death benefit.^[05]

Who’s eligible?

Not everyone may be eligible or accepted for long-term care insurance. Long-term care applicants can be denied coverage for several reasons, and it becomes increasingly difficult to be accepted after age 70.

You might not qualify for long-term care insurance coverage if any of the following are true:

• You already use long-term care.
• You currently need assistance with ADLs.
• You’ve had an AIDS diagnosis.
• You have dementia or a cognitive impairment.
• You have a progressive neurological condition such as Parkinson’s disease.
• You recently had a stroke.
• You’ve been diagnosed with metastatic cancer.^[06]

Let our care assessment guide you

Yes, long-term care insurance can pay for assisted living if a buyer selects a plan that covers this type of care. Some policies might only pay for care in certain settings such as a nursing home or an insured senior’s residence. However, most new long-term care insurance policies are comprehensive and cover a variety of services in different settings, including:

• Assisted living communities
• Nursing homes
• Adult day cares
• Memory care communities
• Hospice care ^[07]

When does long-term care insurance start paying?

For long-term care insurance to begin paying for assisted living, a policyholder must typically meet the benefit triggers and the elimination period. These are two sets of criteria required before benefits start.^[08]

Benefit triggers are eligibility requirements an insurance company uses to determine whether a policyholder needs long-term care and the type of benefits they’ll receive. A nurse or social worker will usually conduct an assessment to determine the senior’s level of need. Many times, policies require that the senior needs help with at least two of six ADLs or has a cognitive impairment.

The elimination period is how long a policyholder must pay for their own services after the benefit trigger begins. It’s similar to a deductible but measured by time, not money. Many long-term care insurance policies allow policyholders to select the length of the elimination period at the time they purchase the policy. It can often last 30, 60, or 90 days, depending on the option selected.

Do private health insurance plans or Medicare cover assisted living?

No, assisted living isn’t generally covered by Medicare or private health insurance. Medicare only pays for long-term care if a senior requires skilled nursing or rehabilitative care for a maximum of 100 days per benefit period in a nursing home.^[09]

Medicaid may pay for assisted living services, but the eligibility requirements vary from state to state. Some states don’t provide Medicaid coverage for assisted living and instead pay for services designed to help seniors continue living in their homes.

The price of a long-term care insurance policy depends on the buyer’s age, their gender, the daily benefit to be paid, the number of years the policy will pay benefits, and the length of the elimination period. Additionally, it’s generally less expensive to purchase a policy at a younger age, and some experts say ages 55 to 65 is the best time to purchase.^[10]

It’s important to note that long-term care insurance companies might increase premiums. Ask whether the insurer can raise prices, and be sure to request information about previous rate hikes.^[01]

In 2022, the average annual premium for a long-term care insurance policy with a value of $165,000 ranged between $950 and $2,700 for individuals between the ages of 55 and 65.^[10] The cost is higher for policies with benefit increases, which are used to protect against inflation, and cheaper for couples who purchase a policy.

Talk with a Senior Living Advisor

Here’s a look at the approximate average annual cost of long-term insurance premiums for a policy with $165,000 in benefits in 2022.

• 55-year-old male individual: $950
• 55-year-old female individual: $1,500
• 55-year-old couple: $2,080
• 60-year-old male individual: $1,175
• 60-year-old female individual: $1,900
• 60-year-old couple: $2,600
• 65-year-old male individual: $1,700
• 65-year-old female individual: $2,700
• 65-year-old couple: $3,750 ^[10]

Long-term care insurance may be more advantageous for some people than others. In addition to the cost, other factors that affect whether buying a policy is right for you include your age, gender, family circumstances, health, income, and wealth.

Here are some questions to ask yourself before buying a long-term care insurance policy:

• How likely is it that I’ll need long-term care? On average, women live longer than men and are therefore more likely to need long-term care. Your health history is another important factor.
• Is a family member available to provide care? If your family members live far away or aren’t in a position to provide assistance, you may be more likely to rely on paid long-term care.
• What’s my family health history? If you’ve had parents or another family member with serious health conditions, that may indicate you’ll need long-term care in the future.
• What’s my income and wealth? Some experts recommend that the cost of a long-term care insurance premium should not exceed 5% of an individual’s income.^[03]

Using long-term care insurance isn’t necessarily the best option for everyone. For some people, the premiums are too expensive, or they may be denied coverage. Fortunately, there are other ways to pay for assisted living.

In addition to using savings, a senior could pay for assisted living by:

• Selling or surrendering a life insurance policy
• Applying for a bridge loan
• Using a reverse mortgage
• Renting or selling their home
• Taking advantage of VA benefits
• Qualifying for Medicaid in a state that covers assisted living

A Place for Mom’s Senior Living Advisors are experienced in helping families find affordable assisted living in their area, and they’re familiar with the different payment strategies. They can also provide a list of referrals tailored to your loved one’s needs, set up tours, and help plan the logistics of a move — all at no cost to your family.