Long-Term-Care Insurance Can Pay for In-Home Care

Many people would prefer to age at home rather than move into an assisted-living facility or nursing home. But for those who have or who are considering getting long-term-care insurance (LTCI) that raises a question—does this cover in-home care? The answer usually is yes, but there are exceptions. What you need to know…

Older group policies often don’t cover in-home care. Nearly all LTCI policies issued in this century cover in-home care—including the increasingly popular “linked benefit” life insurance policies that have an LTCI component. But policies issued earlier may have lower maximum benefits for in-home care or don’t cover in-home care at all. That’s especially likely if the policy was obtained through an employer’s group plan.

The caregiver choice could determine whether care is covered. Although most policies pay for a licensed nurse, some cover in-home care only if it is provided by a “licensed home care agency,” not an individual caregiver. But if you live in a rural area or expect to retire to one, there might not be any qualifying agencies nearby. If so, look for language in the policy’s small print that allows other in-home caregivers if there are no local home-care agencies.

Some policies pay loved ones to care for you. If you see the term “indemnity” or “cash” in your policy’s name or description or one of its provisions, it likely pays a fixed cash benefit that you can spend on any form of care—including “informal care” from a family member or friend.

Help with household chores could be covered—but the rules can be confusing. An LTCI policy that covers in-home care likely covers “homemaker services” such as meal preparation and housecleaning—but with some policies, that’s true only if these chores are “incidental,” meaning that they’re provided by a caregiver who also provides covered personal care during the same visit. Avoid potential missteps. Example: Your caregiver arrives in the morning to help you bathe and dress…then visits a different client before returning to prepare your dinner. The cooking isn’t covered.

In-home care could increase future nursing home costs. LTCI policies typically have “elimination periods”—a certain number of days, often 90, during which care must be paid out of pocket before benefits begin. That period usually doesn’t begin until paid services are obtained, so if you initially receive uncovered care from a spouse or adult child—not a paid caregiver—then later must move into a nursing home, you might have to pay for a full 90 days of expensive nursing home care out of pocket. Instead, arrange for at least one visit from a paid care provider as soon as you qualify for care under your policy, even if your loved ones initially will provide most of your care. Confirm with the insurer that this paid care is sufficient to start the clock.

Exception: Some policies have “service day” rather than “calendar day” elimination periods—the only days that count are when you receive paid long-term care, so arranging a day of paid in-home care won’t help. If a future long-term stay in a nursing home seems likely, consider arranging for a few hours of in-home care on an ongoing basis.