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Posted by Lydia Chan ● January 22, 2019

Long-Term Care Insurance and Alzheimer’s Disease: What You Need to Know

Elderly couple on seaside: Long-Term Care Insurance

One of the scariest parts of an Alzheimer's disease diagnosis is knowing that, eventually, you'll need to rely on others for every aspect of daily living. However, this prospect seems a little less daunting with a long-term care insurance policy on your side. Long-term care insurance pays for many of the costs associated with custodial care, but rarely does it pay for everything. Even those with insurance can face high out-of-pocket costs related to their Alzheimer's diagnosis between coverage types and benefit limits .

Every long-term care policy has its limits. Common limitations and exclusions include:

  • Limits to the maximum amount paid per day or per month
  • Limits to the maximum amount paid over a lifetime
  • Limits to the length of time benefits are paid.
  • Limits to permitted care settings (e.g., only covering nursing home care, not assisted living or home-based care)
  • Waiting periods before coverage begins
  • Exclusions of preexisting conditions
  • Exclusions of specific health conditions

Alzheimer's disease and dementia are the leading causes of long-term care claims, and dementia patients require care for a longer period of time than seniors without dementia. Unfortunately, they are also considered a pre-existing condition. You must secure the policy prior to being diagnosed, even though both conditions are typically covered under long-term care policies.

Look for a policy that not only covers Alzheimer's but offers a long benefit period, flexibility in care providers and settings, and a generous lifetime maximum when you look for long-term care insurance (according to Morningstar, your lifetime care costs could surpass $300,000).

The greater coverage your LTC policy offers, the higher your premiums will unfortunately be. While premium amounts vary across policies and providers, AARP reports that the average premium is $2,700 per year for a typical policy. You could pay significantly more for extended care. Consider other ways you can close the gap between what your LTC policy covers and your actual long-term care needs if you can't afford higher premium payments.

Social Security payments or retirement distributions may cover the remaining balance if you need additional funds after your daily or monthly benefit maximum. A reverse mortgage is a smart option for many seniors if those are not enough. While reverse mortgages had a bad reputation in the past, new regulations protect consumers who use them. They are now seen as a viable option as long as you do your research before you make any important decisions.

More drastic measures are in order if you reach the term limit of your LTC policy and require additional years of care. This is the appropriate time to think about selling a house, applying for an accelerated death benefit on your life insurance policy, or selling or surrendering your life insurance policy entirely. You will likely qualify for Medicaid once you deplete your assets. Unlike Medicare, Medicaid will pay for long-term care services when deemed necessary. Medicaid eligibility and covered services vary by state, and some states participate in long-term care partnerships that protects your assets up to the amount paid by your policy. Do your research if you suspect you will rely on Medicaid someday.

Financial planning for long-term care isn't the only thing to think about after an Alzheimer's disease diagnosis. Make your preferences for end-of-life care known now, as your mental capacity will diminish with time. Consider what type of life-extending care you want, where you'd like to be when you pass, and how you want your remains handled. It's wise to complete documents like advance directives to put your wishes in writing. Have a conversation about your wishes with your loved ones. This way you can be confident the people responsible for your care understand your desires.

There is nothing easy about discovering you have Alzheimer's disease. It's frightening to think about how your body and mind may change over the coming years. You can take comfort knowing you'll be cared for in your times of need by dealing with these tough topics now.

Lydia Chan

Alzheimer's Caregiver | lydia@alzheimerscaregiver.net

Complete state LTC/LTCP certification training requirements with courses designed to meet all recommendations of the NAIC LTC Model Act. All content is ClearCert Certified.

Topics: Health Insurance, Insurance, Life Insurance, Long-Term Care, Certification Training

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