How much is Assisted Living Insurance?

Whether you refer to it as assisted living insurance or long-term insurance, the truth is that this policy can be quite expensive but very necessary for your golden years.

David Bolton

Updated

March 14, 2023

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Whether you refer to it as assisted living insurance or long-term insurance, the truth is that this policy can be quite expensive but very necessary for your golden years. It's, therefore, very important to pay close attention to the details and know how much assisted living insurance will cost you.

As an elderly, there comes a time when you'll start struggling with your day-to-day activities such as cleaning, bathing, laundry, and cooking. Although you may not be very ill and not in need of a high level of constant health care, you may want to move to an assisted living facility. Unfortunately, the monthly costs of assisted living facilities are quite high.

According to Genworth's 2019 Cost of Care Survey, the national monthly average cost of care in an assisted living facility is around $4,000. And because Medicare or Medicaid doesn't cover the costs of long-term care and services, your only option is paying for these costs out of your pocket and this is where assisted living insurance (popularly known as long-term care insurance) comes in handy.

So how much is assisted living insurance? According to AARP, the average long-term insurance premium is about $2,700 a year although these premiums may vary significantly depending on how much coverage you want and where you live. Generally, long-term care insurance is very flexible and will depend on the level of care that you need. Unlike Medicare or any other employer-based health coverage, long-term care insurance can pay for nursing home care, assisted living, and adult daycare and can cover 100% of the costs associated with living in these facilities.

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The Importance of Long-Term Care Insurance

As you get older and approach your twilight years, chances are that you'll at one point need long-term care. And whether or not you remain active, you may reach a point where you cannot do day-to-day living activities such as cooking, bathing, dressing, and many more and the best move would be to move into an assisted living facility. But because assisted living facilities may cost you about $4,000 a month and not covered by Medicare, the wise move would be to have long-term care insurance.

That being said, having long-term care insurance gives peace of mind knowing that you'll be able to afford to pay for an assisted living facility or any care facility for that matter. You should never make a mistake of thinking that Medicare may cover for your long-term care costs because it won't. As such, Medicare shouldn't be your first option as far as the costs of long-term care in an assisted living facility are concerned.

The amount that you pay for long-term care insurance or assisted living insurance will, therefore, cover the following:

‍Assisted living facilities
Extended nursing home stays
Adult daycare centers
Respite care
Hospice
Some policies may cover home care
Memory care facilities, and
Home health care provided by professionals

With that in mind, it's of great importance that you know exactly what your long-term care insurance covers. Of course, you do not want to pay a premium of about $2,700 a year only to be told that the facility or type of care that you've chosen isn't covered in your policy.

Things to Consider when Looking for Long-Term Care Insurance

As we've noted, many factors can affect long-term care insurance. The premium rates that you may be expected to pay may vary widely and may depend on the following.

Your age and health

The older you are, the more health issues you are likely to have. This means that you're more likely to pay expensive premiums if you consider purchasing long-term care insurance at an older age. It's, therefore, advisable to purchase policies when you're younger and in good health.

Your Income

Honestly speaking, spending thousands of dollars on long-term care insurance when you can meet your daily requirements today may not make much sense. If you're low on income or below the poverty levels, then qualifying for Medicaid becomes a lot easier. But if you're financially stable and can pay for your long-term care insurance, then it's the best thing to do.

The premiums

It's important to choose premiums that you can pay comfortably without infringing on your budget. While the annual average is $2,700, you can get cheaper options. Remember, premiums are likely to increase due to inflation while your income is likely to go down or remain stagnant. Whatever the situation, make sure that you choose premiums that you can afford to pay since you could lose all your money if you are unable to pay the premiums. Again, keep in mind that a high cost of long-term care would mean that you have to pay higher premiums.

Gender and Marital Status

Women tend to live longer than men and are more likely to claim long-term care insurance, so their premiums tend to be higher.

Taxes

The premiums paid towards long-term care insurance are not taxed so you can deduct them from your gross income. The deductible amount will, however, depend on your age.

Pre-existing Conditions

Insurers may turn down your application for long-term care insurance if you have pre-existing medical conditions. Keep in mind that there are conditions that might lead to your exclusion from a given long-term care insurance policy. Some coverage exclusions may include mental disorders, drug and alcohol abuse, and self-inflicted injuries.

You should ask the insurer's agent and determine which pre-existing conditions that might lead to your exclusion. Make sure that common old age diseases such as diabetes, Alzheimer's disease, heart diseases, and some forms of cancer are not mentioned as reasons for coverage exclusion.

Policy Coverage Amounts and Limits

Long-term care insurance policies generally have a given limit to the number of benefits that the insured can receive. These amounts can vary depending on your premium but they should be enough to cover the daily costs of living in an assisted living facility or a nursing home. Most policies will pay $100 per day for your costs, so it's of great importance to select benefit amounts and duration that will be friendly to your budget and anticipated long-term care needs.

You should, therefore, compare the average cost of care in your area with the amount of your policy's daily benefits. This can help you know how useful the policy will be to you and the difference that you might be required to pay. You have to remember that inflation might erode your long-term insurance benefits, so it's important to have inflation protection for your policy.

Qualifying for Benefits

You should also be aware of what is known as "benefit triggers". These are conditions that must occur before you're entitled to receiving the benefits. In most cases, insurers will look at your inability to carry out Activities of Daily Living such as bathing, eating, dressing, walking, using the toilet, and many more.

All in all, the amount that you have to pay for long-term care insurance or assisted living insurance might be quite high but certainly worth it if you can afford it. The secret lies in starting early when you're still your and in good health.