What is Long-Term Care Insurance?

LTC Guide

Long-Term Care Guide

Long-term care encompasses a wide range of medical, personal and social services. People may need this care if they suffer from prolonged illness, disability or cognitive impairment.


Long-term care insurance is a type of insurance specifically designed to cover the costs of long-term care services, which may not be covered by traditional health insurance plans or Medicare. Individuals may need this type of care if they suffer from a prolonged illness, disability or cognitive impairment. Long-term care insurance includes services provided by home health care agencies, adult day care centers, traditional nursing homes and continuing care retirement communities.

Long-term care insurance policies have a benefit period or lifetime benefit maximum, which is the total length of time, or total amount of dollars the policy will pay. Common benefit periods for long-term care policies are two, three, four, and five years. Unlimited coverage may also be available by some companies. Other options between five years and lifetime/unlimited coverages may also available from various insurance companies. Most policies convert time periods into dollar amounts and do not actually limit the number of days for which care will be covered by the policy, just the overall dollar amount the policy will pay.

Long-term care insurance premiums are paid in amounts that are identified in advance. The policy pays, up to its coverage limits, for the long-term care that is needed at the time it is needed. Typically, premiums are waived during the time the policyholder is receiving benefits.

What is Covered Under Long-Term Care Insurance?

Long-term care insurance provides medical, personal and social services. When planning for long-term care needs references to various types of nursing care will be made; including skilled, intermediate and custodial.

  • Skilled Care: Involves medical conditions that require care by trained medical personnel (i.e. registered nurses or professional therapist). Services include 24-hour care and may be provided by skilled nursing facility, nursing home, or in an individual’s home through the assistance of a visiting physician or therapist.
  • Intermediate Care: Involves treatment, but not necessarily 24 hours a day. Care is less specialized, but provides more attention to personal needs. A physician orders the care and registered nurses provide supervision.
  • Custodial Care: Daily living activities, such as bathing, eating, dressing, and transferring. Custodial care may also be referred to as personal care.

Long-term care policies are not standardized resulting in many different policy designs. It is very important to know and understand the differences between the types of coverage available and compare each before making a purchasing.

  • Fixed Dollar Amount Policy: Pays a specific amount for each day care is received.
  • Limited Benefit Policy: Limits coverage to care in a nursing home or to one or more lower levels of care (i.e. nursing home or custodial care).