According to a study by the Urban Institute and the U.S. Department of Health and Human Services, approximately half of Americans 65 or older will become disabled. Of those individuals, about 14% will need at least five years of long-term care. Without proper planning, long-term care costs can quickly drain your income and assets.

Long-term care insurance is insurance that can help pay for some or all of your long-term care costs. Purchasing this insurance is one way to plan ahead to assist with care costs you may face in the future.

Covering the high cost of long-term care

A 2018 study by Genworth found that long-term care in a nursing home had a median cost of $89,297. For a private room, nursing home residents can pay up to $100,375. Currently, the average annual cost of nursing home care in Connecticut is $157,716 ($13,143 per month).

Since traditional insurance does not cover nursing home care, you would be required to pay out of pocket for this care. As a result, you may not have assets remaining to leave an inheritance. Long-term care insurance may help cover these costs, potentially leaving you with assets upon your death which could pass to your heirs or other beneficiaries.

When does long-term care insurance go into effect? 

Most insurance companies will cover at least a portion of the cost of your care after an elimination period, typically 60 or 90 days, when you can no longer perform certain activities. Typically, if you can’t perform at least two of these activities, you can file a claim with the insurance company to help pay for your care.

These activities are referred to as “activities of daily living” and include:

  • Bathing
  • Toileting and incontinence
  • Feeding/meal preparation
  • Dressing
  • Transferring from chair to bed or bed to chair
  • Medication management

Creating a plan that benefits you

While long-term care insurance can help pay for your long-term care, additional or different planning may benefit you. An attorney familiar with estate planning and elder law can help you decide if long-term care insurance is right for you.