Long Term Care Insurance Fact Sheet

According to LongTermCare.gov, in 2016 the national average cost of nursing home care was about $82,128 per year (for a semi-private room). This cost doesn't include items such as therapies and medications, which could greatly increase the cost. However, purchasing long-term care insurance can protect your investments and ensure you will be taken care of in the event you need extended care. Here are some tips from the National Association of Insurance Commissioners on purchasing long-term care insurance.

  1. WHAT IS LONG-TERM CARE INSURANCE?

    Long –term care insurance is different from medical care, because it generally helps you to live as you live now instead of improving or correcting medical problems. People often think of long-term care as strictly nursing home care. Long-term care services actually may include help with activities of daily living, home care, respite care, hospice care, or adult day care. This care maybe given in your own home, a day care facility, assisted living facility, nursing home, or in a hospice facility.

  2. WHO NEEDS LONG-TERM CARE INSURANCE?

    If you have a major illness or injury, such as a stroke, heart attack, or broken hip, and need assistance with activities of daily living, such as bathing or dressing, you may need long-term care. If you do need care, you may need nursing home or home care for only a short time. Or, you may need these services for many months, years, or the rest of your life.  It's hard to know if and when you'll need long-term care, but the statistics that follow may help.
  • Life expectancy after age 65 is now 19.4 years (20.6 years for females and 18 years for males). The longer people live, the greater the chance they'll need help due to chronic conditions.
  • About 11 million Americans of all ages require long-term care, but only 1.4 million live in nursing homes.
  • About 70% of people who reach age 65 are expected to need some form of long-term care at least once in their lifetime.
  • About 35% of people who reach age 65 are expected to enter a nursing home at least once in their lifetime. Of those who are in a nursing home, the average stay is a year.
  • From 2015 to 2055, the number of people aged 85 and older will almost triple from over six million to over 18 million. This growth is certain to lead to an increase in the number of people who need long-term care.
  1. HOW DO YOU PURCHASE LONG-TERM CARE INSURANCE?

    Private insurance companies sell long-term care insurance policies. You can buy an individual policy from an agent or through the mail. Or, you can buy coverage under a group plan through an employer or through membership in an association. The federal government and several state governments offer long-term care insurance coverage to their employees, retirees, and their families. These programs are voluntary, and participants pay the premiums. You also can get long-term care benefits through some annuity and life insurance policies.

  2. TAX ADVANTAGES

    Some federal income tax advantages are available to people who buy certain long-term care insurance policies. These policies are called tax-qualified long-term care insurance contracts, or simply qualified contracts.

    Your state may have taken action to offer additional tax advantages. Check with your state insurance department or insurance agent for information about tax-qualified policies. Check with your tax advisor to find out if the tax advantages would be beneficial for you.

  3. GET MORE INFORMATION

    For more in-depth information, order a copy of the "Shopper's Guide to Long-Term Care Insurance" from the NAIC at www.naic.org. If you believe you have been treated unfairly in shopping for long-term care insurance, please contact your state insurance department. You can link to your insurance department's Web site by visiting www.naic.org. Click on "State Insurance Web Sites," then click on your state.

May 2018

About the NAIC

The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S. For more information, visit www.naic.org.

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