Who Should Purchase Long-Term Care Insurance?

Buying long-term care insurance is one way to protect against the high cost of long-term care. However, this type of insurance may not be for everyone, so consider all your options.

Long-term care – care in a nursing home or at home — may be paid for in four main ways:

  • Out-of-pocket. If you have sufficient resources, you can pay for your long-term care needs with money you have saved.
  • Medicare. Medicare covers short-term nursing home stays after an illness or injury that requires hospitalization. Medicare covers up to 100 days of “skilled nursing care” per illness.
  • Medicaid. If you have limited resources, Medicaid may help pay for nursing home care. In order to be eligible for Medicaid benefits a nursing home resident may have no more than $2,000 in “countable” resources (it may be higher in some states). Special rules apply to combined spousal resources when only one spouse is institutionalized and the other would be impoverished by the long term care expense.
  • Long-term care insurance. With long-term care insurance, you pay premiums to buy a policy that pays your long-term care costs if you are admitted to a nursing home or need home care (depending on the policy).

Determining whether you need long-term care insurance depends, in part, on your financial situation. The cost of a long-term care insurance policy varies considerably, depending on your age when you purchase the policy, the benefit period, and the level of benefits, among other things, but the premiums can be expensive. Therefore, if you have the resources to self-insure your long-term care and still have money left over, you likely don’t need to buy a long-term care policy. On the other hand, if you cannot afford to pay monthly long-term care premiums, you will likely be able to qualify for Medicaid.

Another factor to consider is your family’s health history. Most nursing home stays are short-term and paid for by Medicare. A common reason for needing extended long-term care is dementia. If you know you have a family history of Alzheimer’s disease, for example, it may make more sense to buy insurance.

Of course, we never really know what the future may bring. Long-term care insurance is like any insurance policy: we don’t know if we will ever need it. In general, long-term care insurance is something to consider if:

  • you have the resources to pay the premiums, even in retirement,
  • you want to preserve your estate for your heirs, and
  • you don’t have enough money to self-insure.

Click here for Virginia’s SCC Facts about Long-Term Care Insurance in Virginia, and here for special rules applicable to Medicaid policies that could be helpful for folks with more limited resources.


*This article is provided for persons interested in elder law issues in Virginia and across the United States. This article has been written by a practitioner in the field of elder law, but unless otherwise noted, the writer is not affiliated with ThompsonMcMullan, P.C. Nothing in the newsletter or the articles is, or is intended to be, legal advice or a substitute for legal advice. If you need legal advice of any kind, please consult an attorney with experience in that area of the law, whether in our firm, or otherwise.

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