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From assistance with daily activities to medical support, long-term care insurance is designed to provide financial protection when you face chronic illness, disability or cognitive impairment. However, pre-existing conditions, advanced age, health issues and disabilities can disqualify you from getting coverage. Here are the ins and outs of long-term care insurance, a list of health conditions that insurance companies deem uninsurable and alternative solutions to help you get the care you need on a modest budget. You may want to talk to a financial advisor to get specific advice for your situation.
What Is Long-Term Care Coverage?
Long-term care insurance provides coverage for the costs associated with long-term care services. Specifically, it helps individuals pay for assistance with activities of daily living (ADLs) or medical services needed due to a chronic illness, disability or cognitive impairment.
Long-term care services support various activities, such as bathing, dressing, eating, toileting and movement. It can also cover services nurses, therapists and home health aides provide. Some policies may even cover care in nursing homes, assisted living facilities or adult day care centers.
In addition, this insurance aims to help individuals protect their assets and savings from being depleted by the high costs of long-term care. These costs can be substantial and standard health insurance doesn’t cover them. Likewise, Medicare and Medicaid don’t cover these expenses except under specific circumstances and eligibility criteria.
When an individual has long-term care insurance, they pay regular premiums to the insurance company. If they require long-term care services in the future, the insurance policy can provide benefits to cover a portion of the costs up to the policy’s coverage limits. The specific benefits and coverage provided by long-term care insurance policies can vary, so reviewing and understanding the terms and conditions before purchasing a policy is essential.
It’s worth noting that long-term care insurance is generally more expensive and harder to obtain as you get older or have pre-existing health conditions. Therefore, it’s advisable to consider purchasing long-term care insurance earlier in life when premiums are more affordable and eligibility requirements are more flexible.
What Disqualifies You From Long-Term Care Insurance?
Insurance companies consider certain factors disqualifying or exclusionary when you apply for long-term care insurance. These factors can vary between providers, but here are common reasons that may result in disqualification from long-term care insurance:
- Pre-existing conditions: Insurance companies often review an applicant’s medical history to assess their risk. For example, if you have certain pre-existing conditions, such as Alzheimer’s disease, Parkinson’s disease or certain forms of cancer, the insurer may decline or exclude coverage for those conditions.
- Age: Some insurance companies have age restrictions and may not offer coverage to individuals beyond a certain age, typically around 80 or 85. The cost of premiums also tends to increase as you get older. Conversely, you can’t be younger than 18 when purchasing coverage.
- Existing disabilities or impairments: If you already have a disability or impairment that requires long-term care, insurance companies may consider it a high-risk factor and decline coverage.
- Cognitive impairments: Severe conditions like dementia may disqualify an individual from obtaining long-term care insurance. Insurers assess the risk associated with cognitive decline and may exclude coverage for related care needs.
- Terminal illness: Individuals with a terminal illness may not be eligible for long-term care insurance, as the policy aims to cover long-term care needs rather than end-of-life care.
- Recent hospitalizations or surgeries: Insurance companies may impose waiting periods or exclude coverage for pre-existing conditions if an applicant has recently been hospitalized or undergone a significant surgery.
- Substance abuse or mental health disorders: Some insurers may decline coverage or exclude certain conditions related to substance abuse or specific mental health disorders.
- Declining health: If an applicant’s health is already in decline, insurance companies may deny coverage or charge higher premiums to account for the increased risk.
- Criminal history: If crimes appear on your personal record, insurance companies might refuse to provide coverage, particularly if you have any felonies in your past.
Remember, not all insurance providers have the same criteria and the availability of long-term care insurance and the specific conditions they cover can vary. Therefore, when considering long-term care insurance, it’s recommended to consult with multiple insurance companies, carefully review the policy terms and conditions and seek advice from an insurance professional or financial planner specializing in long-term care planning.
Examples of Uninsurable Health Conditions
Because each insurance company has underwriting guidelines and practices, the specific list of uninsurable conditions can vary between providers. That said, here are some health conditions that insurance providers typically perceive as high-risk:
- Alzheimer’s Disease, dementia and other forms of cognitive issues
- Ankylosing spondylitis
- Amyotrophic Lateral Sclerosis
- Bipolar Disorder or other depression with the use of antipsychotic medications
- Cerebral Atrophy (Paralysis)
- Cerebral Palsy
- Cirrhosis of the Liver
- Current Cancer and Metastatic Cancer
- Cushing’s Syndrome
- Cystic Fibrosis
- Huntington’s Disease
- Kidney Disease requiring dialysis
- Multiple Sclerosis
- Muscular Dystrophy
- Myasthenia Gravis
- Parkinson’s Disease
- Spinal Cord Injury
- Significant Stroke/Cerebral Vascular Accident (CVA)
- Systemic Lupus
In addition, if you require help with activities of daily living or live in a care facility, companies will likely consider your conditions uninsurable. Likewise, if you use a wheelchair, walker, cane, stairlift or hospital bed, you may be ineligible. Furthermore, oxygen therapy also disqualifies you from coverage in most situations, as do disability benefits, with the possible exception of military benefits.
Remember, this list is not exhaustive and the availability of coverage for these conditions can vary between insurance providers. Insurance companies may also consider factors such as the severity and stability of the condition, the age of the applicant and other individual circumstances when assessing insurability.
Long-Term Care Health Qualifications
Typically, individuals aged 65 and above are eligible for long-term care insurance, even if they have a notable health condition. Nonetheless, eligibility depends on specific criteria each insurance company sets. For instance, certain companies may mandate a specific level of net worth or income to qualify, while others focus on your medical conditions and history.
In other words, your eligibility for long-term care insurance rests with the insurance company. Therefore, it’s crucial to research the criteria of long-term insurance providers to identify the one that aligns with your circumstances.
How to Pay For Long-Term Care without Long-Term Care Coverage
When shopping around for long-term care coverage, you might have disqualifying health conditions or discover that the insurance premiums aren’t realistic for your budget. If so, you can pay for long-term care through other means, such as:
- Self-Funding: If long-term care insurance is not feasible, you can adopt a simple approach of living on a reduced budget to save and invest more. It’s an excellent idea to set aside money regularly for investment purposes, whether through a 401(k), an IRA or a non-retirement investment account.
- Group Plan Coverage: If your employer offers long-term care insurance as a benefit, you may be eligible for enrollment regardless of your health history. Taking advantage of such coverage is advisable if you have a chronic condition, as it may allow you to continue it even after leaving the employer.
- Long-Term Care Annuity: Consider investing in a long-term care annuity, where you make a lump sum payment and receive a consistent, specified income for the rest of your life. Long-term care annuities often include provisions to assist with long-term care expenses.
- Hybrid Life Insurance/Long-term Care Policy: Some life insurance policies come with a long-term care rider, making it easier for individuals with chronic conditions to qualify for coverage. These policies combine life insurance benefits with the option for long-term care coverage.
- Short-Term Care Policy: Instead of a long-term care policy that provides coverage for multiple years, you can choose among short-term care policies offering coverage for a year or less. While the benefits may not be as extensive as traditional long-term care insurance, having some coverage is better than none.
- Medicaid: Individuals with limited income and countable assets below certain thresholds may be eligible for long-term care services covered by Medicaid, a government program.
- Life Insurance Policy Settlement: If you currently hold a life insurance policy, pursuing a long-term care life settlement is possible. To do so, you can sell the policy and use the proceeds to cover long-term care expenses.
The Bottom Line
Long-term care insurance covers the costs associated with long-term care services, assisting individuals with activities of daily living (ADLs) and medical services related to chronic illness, disability or cognitive impairment. It aims to protect assets and savings from the high expenses of long-term care, which are often not covered by standard health insurance, Medicare or Medicaid. Therefore, researching and evaluating options is essential to find the most suitable approach for individual circumstances.
Tips for Qualifying for Long-term Care Insurance
- Long-term care looks different for everyone because of the endless combinations of health conditions and financial circumstances. As a result, there’s no simple answer for how to navigate long-term care and financial management in retirement. Fortunately, an experienced financial advisor can help establish a sustainable plan for your golden years. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- As with many aspects of retirement, timing is crucial for long-term care insurance. If you’re unsure how your timeline matches your long-term care situation, here’s how to know when to apply for long-term care insurance.
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Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.