What Does Long-Term Care Insurance Cover?

Some of what long-term care insurance covers depends on the policy, but it can cover:

• Nursing home care
• Assisted living facilities
• Adult day care services
• In-home care
• Home modifications
• Medical equipment

The details of when and how these things are covered are more complicated. All it takes is a 60-second scroll through Reddit to realize that understanding what long-term care insurance covers isn’t easy. But hey, don’t fret—it is possible. And we’re going to make sure you do.

 Long-term care is an important decision. Connect with a trusted pro to make sure you have the right coverage.

What Is Long-Term Care (And How Is It Different From Medical Care)?

Long-term care (LTC) is any care you need for more than three months that involves help with daily activities like bathing, dressing, cooking and cleaning. Even help moving around the house can qualify as LTC. It usually happens in a nursing home or assisted living center or at home with a caregiver.

Medical care is different. It focuses on preventing, diagnosing and treating illness or injuries—things like doctor visits, urgent care, ER visits and hospital stays.

Although both can involve doctors, nurses and other health care professionals, long-term care and medical care are covered by different insurance plans. It’s important to understand that medical insurance—including Medicare—doesn’t cover LTC.

What Services Does Long-Term Care Insurance Typically Cover?

As with most kinds of insurance, the exact range of services LTC insurance covers will depend on your individual policy.

But most policies cover:

• Personal care services: These are things like help with bathing, eating, moving around and going to the bathroom.

• Supervision and hands-on assistance: Alzheimer’s and dementia patients often require careful watching to ensure they don’t wander or hurt themselves. This kind of hands-on supervision is covered.

Some policies may also cover:

• Homemaker and support services: While not always included, some LTC policies cover homemaker or chore worker services—someone who comes to your house to cook meals and run errands. This kind of coverage usually makes the policy more expensive.

• Skilled and therapy-related services: Occupational, speech, physical and rehabilitation therapy can be included in your policy. Rehabilitation would be part of a care or recovery plan for a chronic illness (not to be confused with rehabilitation from an acute condition that would be covered by medical insurance).

• Medical equipment and home modifications: LTC policies will sometimes cover some medical equipment and home modifications (like adding a ramp). Usually, you’ll need to add a rider or supplement to your policy—and pay extra—to get this coverage.

Where Can You Receive Covered Care (Care Settings and Facility Types)?

You can receive LTC in a variety of places. If you want to be able to choose where you get care, you’ll need to be able to pay—either out of pocket (self-insurance) or with an LTC policy. If you rely on Medicaid, you’ll have fewer choices about where you receive care.

Here are some of the settings where you can receive covered care:

Your Home

Who doesn’t want to stay in their own home? You can keep your routine of watching Gunsmoke at lunch in your favorite 100 year-old recliner (or is it 200?). Depending on the type of care you need, you can get that care at home. Home health aides, certified nursing assistants or nurses can come into your home and provide help with daily living as well as certain medical services.

In some cases, an LTC policy will even pay family members to provide care. If that’s important to you, make sure you look for a policy that includes this option. These policies can be harder to find, so working with an insurance pro may help.

Assisted Living Facilities

Maybe you’re aged to perfection and ready to dominate the bridge club. If you don’t need skilled nursing around the clock, assisted living offers a residential, social, supervised setting where you can get help with daily living tasks.

Nursing Homes and Skilled Nursing Facilities

These are the settings most people associate with LTC. They provide the highest level of assistance and care, and they’re commonly covered by LTC insurance.

Adult Day Care Centers

Services don’t have to be 24/7. LTC policies often cover care at adult day care centers for people who only need help and supervision during the day.

Other Settings

Depending on the policy, more specialized care settings are sometimes covered as well. These include:

• Memory care units—secure care for people with Alzheimer’s disease and dementia
• Continuing care retirement communities—multiple levels of care all in one place
• Respite care—short-term relief for primary caregivers
• Hospice care—palliative care for end-of-life scenarios

What Triggers Long-Term Care Insurance Benefits to Start?

Unlike insurance that covers sudden disasters, LTC insurance usually doesn’t kick in after one big event like a car crash or house fire. Instead, coverage starts when you meet specific criteria. Those criteria are called benefit triggers.

What a Benefit Trigger Means

A benefit trigger is what makes your LTC insurance benefits kick in.

The Two Most Common Triggers

Most people qualify for benefits in one of two ways: They need help with at least two activities of daily living (ADLs), or they have severe cognitive impairment.

Who Determines Eligibility

The insurance company determines your eligibility through an assessment form filled out by a nurse or social worker—or sometimes a doctor.

What Are the 6 Activities of Daily Living (ADLs) Used for Triggers?

Insurance companies usually measure your ability to function day to day using a list called activities of daily living (ADLs). Get ready—things are about to get nitty-gritty (if you’re eating, you may want to stop).

The six standard ADLs are:

• Bathing (personal hygiene)
• Dressing
• Toileting (going to the bathroom)
• Transferring (mobility)
• Continence (controlling your bladder and bowels)
• Eating (not necessarily preparing food)

How Many ADLs Usually Trigger Benefits?

Any ADL above that you can’t complete on your own may count toward your benefit trigger. Most LTC policies start benefits once you need help with at least two ADLs.

How ADLs Are Assessed in Real Life

Your regular health care provider is usually the starting point for discussing—and possibly assessing—ADLs. If there’s a concern, they may evaluate your ability to care for yourself in a few ways: observing you at home or in the office, asking caregivers what they’ve noticed, and talking with you about your day-to-day routine.

On top of basic ADLs, medical professionals also assess instrumental ADLs (IADLs) that measure more complex parts of your daily life. Cognitive decline often shows up in these measures first because of the higher level of thinking required. IADLs don’t trigger LTC benefits, but they can signal when further assessment is needed.

Does Cognitive Impairment Trigger Benefits?

Cognitive impairment is one of the two most common benefit triggers (loss of ability to do ADLs is the other one). Similar to ADL assessment, cognitive impairment is determined through a series of standardized cognitive tests.

What Counts as Cognitive Impairment

Severe decline in mental capacity that requires constant supervision and care will trigger benefits. You may qualify if you have trouble with cognitive tasks like:

• Remembering information (short-term and long-term)
• Making logical decisions and solving problems
• Recognizing people or places
• Communicating clearly
• Judging safety risks

The decline must be assessed or diagnosed by a medical professional. Straightforward diagnoses accepted by LTC policies include:

• Alzheimer’s disease
• Brain injury
• Stroke

But you don’t need a specific diagnosis to qualify for benefits. A medical professional can also confirm cognitive decline with tests like these:

• Mini-Mental State Examination (MMSE)
• Montreal Cognitive Assessment (MoCA)
• Neuropsychological testing
• Physician’s cognitive status report

If they determine that mental capacity is low enough to require 24/7 supervision or care, LTC benefits will likely be triggered.

Why Cognitive Impairment Is a Separate Trigger

People with severe cognitive impairment may still be able to handle all six standard ADLs on their own. But they may not be safe without someone nearby. That’s why cognitive impairment is a separate benefit trigger. A person can need 24/ 7 supervision even if they don’t need hands-on help with dressing, bathing or other daily tasks.

What Is the Elimination Period for LTC and How Does It Work?

Instead of a deductible, LTC policies have an elimination period—a waiting period before the insurance company starts paying for your care. Generally, the longer the elimination period, the lower your premiums (similar to choosing a higher deductible).

Common elimination periods are:

• 30 days
• 60 days
• 90 days

During the elimination period, you’ll need to pay for care out of pocket. So take a look at your finances and choose a length you can afford. If you’ve got a good chunk of retirement savings stashed away, go for a longer elimination period to save on premiums.

Calendar Days vs. Service Days

Your elimination period can be counted in one of two ways: calendar days or service days.

Calendar days are straightforward—your elimination period starts counting down on the day you start receiving care.

Service days only count the days you actually receive care. For example, you may only need care three days a week. That means only three days are counted each week toward your elimination period. At that rate, it would take about 30 weeks—or 210 calendar days—to complete a 90-day service-day elimination period.

If you have a service-day elimination period, make sure you’re prepared to cover the cost of care for a longer amount of time out of pocket.

How to Read Your Policy’s Benefit Triggers and Elimination Period

Two of the most important parts of your LTC policy are what triggers your benefits to start and how long you’ll have to wait until they do. Here are step-by-step instructions for how to figure that out.

Step 1: Locate the benefit trigger or eligibility section.

Go to the policy index. The section you’re looking for will likely be found near the beginning of the policy. Look under headings like “Conditions of Coverage” or “When Benefits Are Payable.”

Step 2: Identify ADL requirements.

Typically, benefits start when you can’t perform at least two of the standard activities of daily living (ADLs) on your own.

Step 3: Check cognitive impairment definitions.

The other common benefit trigger is cognitive impairment. You’ll need to know how your insurance policy defines it in order to know when your benefits will start.

Step 4: Find the elimination period length.

Every policy has an elimination period—a set number of days you have to wait after your benefits trigger before the insurer pays. Common options are 30, 60 or 90 days. To find the exact length for your policy, look under sections called “Schedule of Benefits,” “Definitions” or “Benefits.”

Step 5: Determine how the elimination period is counted.

Once you’ve found the elimination period length, make sure to note whether your policy counts those days as calendar days or service days. A good place to look for this is under the “Definitions” section.

Step 6: Confirm when the elimination period starts.

Your policy should explain when the elimination period begins—usually once a licensed health professional certifies that you need care. If anything’s unclear, call the claims department listed on your policy.

Look under “When the Policy Pays” (sometimes called “Benefits”) to find details about when payments will start after your elimination period ends.

Step 7: Note documentation and recertification requirements.

LTC insurers require thorough documentation to prove your claim, so make sure you read the section that outlines what you need to provide to get your benefits started. Documentation you’ll likely have to provide includes:

• Policyholder statement (from you) explaining the reason for your claim
• Attending physician statement (APS) certifying your need for care
• Plan of care written by a licensed health care professional showing what kind of care you need
• Authorization to release information allowing insurers to access your medical records with your permission

You may also need to submit periodic updates to keep benefits going—including a reassessment from a medical professional certifying that you still need care.

How Are LTC Benefits Paid (Reimbursement vs. Indemnity Policies)?

Most LTC policies pay benefits one of two ways: reimbursement or cash (indemnity).

Reimbursement

With reimbursement, you either pay for care up front and get reimbursed or the provider bills your insurance company directly. If you choose to get reimbursed, you’ll have to provide receipts. Also, reimbursement policies only pay for what you actually spend—up to your daily limit.

For example, if your daily limit is $200 and you spend $120 a day for three days and $200 a day for four days, your policy would reimburse $1,160 for the week (not $1,400).

Indemnity

If you have an indemnity policy, you’ll be paid an agreed-upon lump sum every month no matter how much your care costs. These funds can be used to cover any costs for care, often including care given by family members. Since family members often provide a lot of care, this could be a great option (check the specific policy wording to make sure it covers informal care).

What Limits Apply to LTC Benefits?

Unfortunately, LTC benefits are not a boundless fount of funds. There are limits while benefits are being paid out, and there are limits to how long the insurance company will continue to pay.

Daily or Monthly Limit

You have a couple of options for how your benefits are paid out—although most policies use the first option.

With a daily limit, the insurance company will reimburse you up to a set dollar amount per day. For example, let’s say your daily limit is $350 and you find a nursing home that costs $216 a day. But now imagine you need an extra procedure one day that costs $1,000. That day’s total cost would be $1,216. Even though a $350 daily limit adds up to $10,500 of potential coverage for the month, you can’t “borrow” unused dollars from cheaper days. You’d still have to pay $866 ($1,216 - $350) out of pocket because it’s over your daily limit.

With a monthly limit, you have more flexibility on high-cost days. For example, let’s say your monthly limit is $10,000 (about $333 per day) and your average daily care cost is $200. If you have an incident (like getting sick or having a stroke) that raises your costs for several days that month, the higher-cost days would still be covered—as long as your total costs for the month don’t exceed $10,000.

Benefit Period and Lifetime Limit

Most LTC policies pay benefits for a set number of years (three years is common). They also usually have a lifetime maximum—the total amount the policy will pay. If your care is exceptionally expensive, you could hit that cap before the benefit period ends. In this case, your policy coverage would stop.

Inflation Rider

To offset the rising cost of care, most policies have the option to add an inflation rider for an additional cost. An inflation rider ensures that your policy benefits will keep up with inflation—so your payout still covers your costs when the time finally comes to use your policy.

H2 What LTC Insurance Usually Won’t Cover

LTC insurance won’t cover everything. Even if you’re already in a facility, it won’t cover surgery or hospital stays if you need those. Here are common exclusions—and a few coverage limits that can still leave you paying out of pocket:

• Medical treatment and acute care: This includes hospital stays, surgery, doctor visits and prescription drugs.

• Room and board above the set limit: If you choose a care facility that’s more expensive than your daily or monthly limit, you’ll have to cover the difference out of pocket.

• Care by unlicensed family members: Many policies won’t pay informal caregivers—no matter how much care they provide. If covering this kind of care is important to you, make sure you get a policy that allows it. An independent insurance agent can help with this.

• Preexisting conditions: You won’t qualify for an LTC policy if you have any preexisting conditions like early-onset dementia or heart problems—or if you already have physical limitations (like using a cane) or need help with daily tasks. That’s one big reason we recommend shopping for LTC insurance at age 60 while you’re still healthy enough to qualify for coverage.

• Costs during your elimination period: Like we mentioned earlier, you’ll need to pay for your care out of pocket during your elimination period.

• International or unapproved providers: Before you choose your provider or facility, make sure it’s approved (which often means it’s licensed by the state).

Bottom line? Make sure you understand what an LTC policy covers and what it doesn’t before you commit.

Questions to Ask Before You Buy a Policy

There are a lot of pieces to an LTC policy, and it pays to be prepared before you buy. Here are a few questions to ask insurance agents and yourself so you can be sure you’re getting what you need:

• What are the benefit triggers? How are you assessed?
• How are benefits paid? Is there a monthly or daily limit? Is the policy a reimbursement or indemnity policy?
• Which providers and facilities are approved under this policy?
• Do you have enough retirement savings to self-insure for at least three years (about the average time spent in LTC)?¹
• Do you want to have choices if and when you need LTC, or do you want to leave it up to the government? (Good luck with that.)
• How do you want things to go when you need care? Do you want to leave it up to your children to figure out how to care for you? 

We know some of these questions are not comfortable. But there’s no getting around the hard stuff. Facing it and planning for yourself now, while a little unpleasant, is way less scary than pushing it off until you no longer have the power to make the decisions anymore.

We get calls on The Ramsey Show all the time from adult kids who are scared because their parents don’t have a plan—and worried they won’t be able to give them the care they need. Make a plan while you can.