United States
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Long term care insurance pays for extended care that health insurance and Medicare largely do not, and eligibility usually turns on being unable to perform a number of activities of daily living or on cognitive impairment. The outline lists two sub-items: eligibility, and levels of care.
Most people assume Medicare pays for a nursing home. It does not, other than for limited skilled care following a hospital stay, and that gap is the entire market for this product. The exam tests the gap before it tests the policy.
Levels of care
| Level | What it is | Who provides it |
|---|---|---|
| Skilled nursing care | Continuous care ordered by a physician | Registered nurses, around the clock |
| Intermediate care | Occasional nursing and rehabilitative care | Nurses, less frequently |
| Custodial care | Help with the activities of daily living | Anyone, no medical training needed |
| Home health care | Care delivered in the insured's own home | Agency staff or visiting professionals |
| Adult day care | Daytime care outside the home | A center, while a family caregiver works |
Custodial care is the row that matters. It is the least skilled kind and the most expensive in total, because it goes on for years, and it is the kind health insurance and Medicare are least willing to pay for. Anything that can be provided by someone with no medical training is not medical treatment, and health coverage pays for treatment.
How a claim is triggered
Benefits typically begin when the insured cannot perform a stated number of activities of daily living without help, or when there is cognitive impairment requiring supervision. The activities are the ordinary business of looking after yourself: bathing, dressing, eating, toileting, transferring and continence.
How many of those must fail before a policy pays is a contract term, and we print no figure. What is examinable is that the trigger is functional rather than diagnostic. Nobody asks what condition caused it.
Someone with dementia may be physically able to perform every activity of daily living and still be unable to live safely alone. Policies therefore include cognitive impairment as an independent trigger, and a stem describing a physically capable insured who needs supervision is testing whether you know it stands on its own.
Three ways to buy the coverage
- A standalone long term care policy, individual or group.
- A long term care rider on a life policy, which the outline lists among the life riders in section II.
- An accelerated death benefit for a long-term care illness, which Texas expressly permits in the Insurance Code.
The second and third overlap in practice and are distinguished by where the money comes from. A rider adds a benefit. An acceleration takes it from the death benefit already there, reducing what the beneficiary receives, and Texas allows it for a long-term care illness at TIC 1111.052.
An insured has advanced dementia. She can bathe, dress and eat without physical assistance but cannot be left alone safely. Her long term care policy uses the standard triggers. Is she likely to qualify?
- No, because she can perform the activities of daily living
- Yes, on the cognitive impairment trigger
- No, because dementia is a preexisting condition by definition
- Only if she is admitted to a nursing facility
Where it sits, in two portions
- General portion
- Section V, heading F, two sub-items, section worth 16
- Texas portion
- Accident and health only, long term care, pointing at the Administrative Code
- Life half
- Long term care rider, section II
- Also related
- Medicare, section VII, and what it does not cover
Texas regulates long term care policies through Administrative Code rules that we have not harvested, so this page states no Texas minimum standard. The Insurance Code gives us the accelerated benefit provision and not the long term care rules.
The opinion, and the concession
Learn what Medicare does not cover and this topic answers itself. Custodial care, over a long period, in a setting that is not a hospital: that is the shape of the gap, and every feature of a long term care policy is built around it. Candidates who learn the policy first end up with a list of benefit triggers and no idea why anyone buys the product.
The concession: the number of activities of daily living that must fail, benefit periods, elimination periods and daily benefit amounts are all contract terms and Texas standards we do not hold. Long term care is also one of the most heavily regulated products a producer can sell, with disclosure and suitability requirements the exam barely touches. Passing the exam is not the same as being ready to sell it.
Common questions
Does Medicare pay for long term care?
Largely no. Medicare covers limited skilled nursing care following a qualifying hospital stay, and it does not pay for custodial care, which is the help with daily living that most long term care actually consists of. That gap is what long term care insurance exists to fill.
What are the activities of daily living?
Bathing, dressing, eating, toileting, transferring between bed and chair, and continence. Long term care policies typically begin paying when the insured cannot perform a stated number of them without help. How many is a contract term rather than a figure set by law.
What is custodial care?
Help with the activities of daily living, provided by someone with no medical training. It is the least skilled level of care and by far the most expensive in total, because it continues for years, and it is the level health insurance and Medicare are least willing to pay for.
Can long term care be added to a life policy?
Yes, either as a rider that adds a benefit or through an accelerated death benefit that draws on the existing face amount and reduces what the beneficiary receives. Texas permits acceleration for a long-term care illness under TIC 1111.052, on a written medical opinion satisfactory to the insurer.