How Does Long-Term Care Insurance Work?

Over the years, Americans have been living longer lives, as well as incurring increased medical and daily costs as we age. Many older adults find that their retirement savings and Medicare plans are not enough to sustain their financial needs through the end of their lives, especially when nursing home care or at-home assistance is required.

Long-term care insurance can be a useful solution to this problem and take the burden off of families. This is because long-term care insurance provides reimbursements for personal and custodial care for older adults, up to a daily set limit. Enrolling early helps many families budget for the cost of at-home health aides, skilled nursing, and other assistance with the activities of daily life.

Is Long-Term Insurance Worth It?

According to a GenWorth Cost of Care study, the average national median cost for a private room in a nursing home is over $108,000 per year. Meanwhile, Medicare typically only covers up to 100 days of skilled nursing care following a hospital stay. With the average monthly cost of a home health aide ranging from $6,000 to $9,000, long-term care insurance begins to look like a worthwhile investment.

Having a long-term care policy can help you remain in your own home with assistance from a visiting or live-in aide. It can also help you and your family afford the cost of a nursing home, if necessary.

How Much Does Long-Term Care Insurance Cost?

According to the 2024 American Association for Long-Term Care Insurance (AALTCI) annual Price Index survey, the average annual premiums for long-term care insurance range from $950 to $1,500 for a $165,000-benefit policy without inflation protection.

Premiums can rise the older that a person or couple chooses to invest in long-term care insurance. The average annual premium for a couple who purchases a long-term care insurance policy at age 60 is around $2,600 for combined coverage.

What Is the Oldest Age for Long-Term Care Insurance?

Insurance companies may balk at issuing long-term care policies to older adults because they are thought to need to use them sooner, resulting in less earnings for the company overall as well as more payments. While some companies consider ages 55 to 65 as ideal for purchasing long-term care insurance, there are benefits associated with enrolling earlier, such as lower premiums or an expanded range of options available.

In general, many companies stop issuing new policies around the age of 75 to 80. Age 85 is considered the absolute maximum that a healthy adult with no pre-existing conditions can usually qualify for long-term care insurance.

Is 65 Years Old Too Old for Long-Term Care Insurance?

No. It is recommended that those around age 65 purchase long-term care insurance as soon as possible, as premiums may increase the longer that you wait.

Is It Hard to Qualify for Long-Term Care Insurance?

Insurance companies are legally allowed to discriminate when it comes to providing long-term care coverage. Both age as well as prior health history are factors that are considered when a company sets premiums as well as agrees to provide coverage. If any of the following circumstances apply to you, you may find it more difficult to enroll in long-term care insurance:

• You are over age 65.
• You have been prescribed a handicap sticker.
• You require help with activities of daily living (ADL), such as bathing, dressing, eating and going to the bathroom.
• You have symptoms or a diagnosis of one of the following conditions:
  • AIDS/HIV
  • Alzheimer’s disease
  • Dementia
  • Multiple sclerosis
  • Muscular dystrophy
  • ALS
  • Parkinson’s disease
  • Bipolar disorder
  • Schizophrenia or other mental health conditions that can require the use of antipsychotics
  • Cancer
  • Cardiomyopathy
  • Cerebral palsy
  • Paralysis
  • Cystic fibrosis
  • Hemophilia
  • Huntington’s disease
  • Kidney failure
  • Sickle cell anemia
• You are incapable of climbing stairs, walking two blocks, or answering questions about your finances, personal health, or family health history during a screening interview.

What Disqualifies You from Long-Term Care Insurance?

Waiting too long to enroll is the number one reason why you might be disqualified from long-term care insurance. Once you reach age 80, you may still expect to incur significant expenses for your care, but be unable to access the policy that could help you and your family afford them.

Other concerns for insurance companies include:

• Substance abuse issues
• A diagnosis of terminal illness
• Certain preexisting conditions
• Cognitive impairments
• A major recent health issue or hospitalization
• A felony record.

All of these may disqualify you from long-term care insurance.

Common Reasons Why Long-Term Care Insurance Claims Are Denied

Long-term care insurance claims are meant to provide a safety net as seniors age, but at times insurance companies look for reasons to deny benefits and protect their profits. Some of the most common reasons why a long-term care insurance claim might be denied include:

No Prior Confinement

Some insurance policies insist that the policyholder must have had a recent hospital stay or nursing home admittance to qualify for their benefits. This is like getting prior authorization from a doctor before a procedure. However, like prior authorizations in health care coverage, this technique is often weaponized by insurance companies to protect their bottom line.

Not all prior confinement conditions for insurance companies are legal in every state. When in doubt, consult with an insurance dispute lawyer for help.

Insufficient Evidence

Whether due to simple errors, lost paperwork, or poor records, some claims are denied because there is insufficient evidence of the policyholder’s condition and needs.

Personal Care Provision

Long-term care insurance policies are popular particularly because they often allow seniors to remain at home and receive help with activities like grocery shopping, cooking, cleaning, and transportation. However, some policies will deny benefits for these activities unless the policyholder is also receiving help with ADL, like bathing, dressing, or eating. It is important to show that home health aides are performing a variety of caregiving tasks to fight a denial of long-term care insurance benefits.

Coding or Billing Errors

Sometimes a claim might be submitted incorrectly on the insurer’s end. This may be due to a coding error or an accidental duplicate submission. If so, you may be able to resolve the situation by filing a simple internal appeal for re-review.

Lapsed Policy

Accidental policy lapses due to stopped payments are a common source for insurance denials. If you are concerned about your ability to remember to pay, or a parent’s memory loss, you may be able to enroll in automatic debits from your account or name a third-party addressee for your bills. This can prevent a policy from being canceled due to non-payment.

Failed Assessments

An insurance provider may have adjustors call to conduct a benefits assessment. This kind of screening can result in a denial of ongoing benefits depending on how questions are answered. For instance, if your older relative were to tell an insurance adjustor, whether through cognitive impairment or pride, that they no longer required the services of their home health aide, an insurance adjustor may be able to deny their benefits moving forward based on that assessment.

Pre-Existing Conditions Not Covered

It can be difficult to qualify for long-term care insurance if you have pre-existing medical conditions. If you qualify, the policy may have exclusions or limitations preventing you from accessing the full range of possible benefits.

What Do You Do When Your Long-Term Care Insurance Is Denied?

If you or a loved one have paid into a long-term care insurance policy, you expect to be able to draw on its benefits when you need them most. However, providers like Lincoln Financial Group are notorious for denying people’s long-term insurance claims.

Some provisions that insurance carriers insert into policies are illegal by state or federal law. For instance, the prior confinement provision is not enforceable in every state. Additionally, some state legislatures have created guardrails to protect seniors from unintentional lapses in payments due to memory loss, sudden hospitalizations, or other impairments.

If your claim has been denied for any of these issues, you may be able to request an appeal and qualify for internal as well as possibly external review of your insurance claim. You may also be able to file a lawsuit after a bad-faith insurance denial to ensure that you can access the benefits you have set up for your or a loved one’s care. This process can result in not only receiving benefits but also additional damages as a result of the company’s breach of contract.

A Lawyer Can Help if You’ve Been Denied Long-Term Care Insurance

A lawyer can make all the difference during an insurance dispute. Suppose you’ve been denied long-term care insurance benefits. In that case, our firm may be able to help you build up a strong case for recovery with additional documentation and proof of industry regulations that you may not know about on your own. At Wallace Law, our attorneys are skilled negotiators with a history of bringing insurance adjustors to heel when they go too far in their denials and rejections of claims. For a free consultation, contact our firm today.