Distinguishing Health Insurance From Long-Term Care Insurance: Top Differences
TL/DR –
The cost of healthcare and long-term care in the U.S. have been increasing, leading to approximately half of U.S. adults finding it difficult to afford these costs. Health insurance and long-term care insurance differ in many ways, with health insurance covering costs for doctors’ visits and prescription drugs, while long-term care insurance covers costs for living in a nursing home and assistance with daily activities. Despite the potentially high costs of long-term care insurance, the likelihood of requiring long-term care stands at 70% for a 65-year-old, making the insurance a necessity for many seniors.
Understanding Long-Term Care Insurance vs Health Insurance
The cost of healthcare and long-term care in the U.S. is escalating, causing financial stress for about half of U.S. adults, according to KFF. Insurance offers some protection against these expenses, but it’s crucial to understand the difference between health insurance and long-term care insurance.
Long-term Care Insurance vs. Health Insurance: The Differences
The National Institute on Aging explains that long-term care insurance covers services for individuals who can’t perform everyday activities independently. It covers assistance with basic activities, meal preparation, housekeeping, and transportation. Health insurance, however, caters to costs related to doctors’ visits and prescription drugs.
The coverage of these services varies between health insurance and long-term care insurance, with traditional health insurance plans not offering non-medical coverage like long-term care insurance does.
Why Long-Term Care Insurance?
With support for activities of daily living (ADLs) often not covered by health insurance, long-term care insurance can help cover the substantial costs of a home health aide or nursing home facility. The insurer Genworth reports that a semi-private room in a nursing home costs nearly $8,000 per month.
According to the Administration for Community Living, over two-thirds of 65-year-olds will need some form of long-term care, making long-term care insurance a viable asset for future protection.
Purchasing Long-Term Care Insurance
You can buy long-term care insurance through an insurance agent from a provider. Alternatively, you might consider connecting with policies from various insurers through an independent insurance agency or financial advisors.
According to Dr. Char Hu, co-founder and CEO of The Helper Bees, an InsurTech company, long-term care insurance is commonly paired with life insurance, referred to as a hybrid policy. This combination provides an additional layer of financial protection, especially for long-term care expenses.
Long-Term Care Insurance Cost
The cost of long-term care insurance depends on the type of policy and factors such as age. A policy with $165,000 in level benefits, as per 2023 data from the American Association for Long-Term Care Insurance (AALTCI), averages an annual premium of $900 for a 55-year-old male.
Costs rise with age and women generally face higher costs than men. Therefore, consider starting your insurance planning around age 40.
Conclusion
While health insurance is crucial for regular medical needs, it may not adequately cover long-term care. Considering most seniors will require long-term care, long-term care insurance can mitigate this risk. However, understanding the policy details and balancing costs and coverage is essential, and professional consultation can be helpful.
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