Does Long-Term Care Insurance Cover Assisted Living?
Every long-term care insurance plan and facility is different. Pay close attention to the details.
This article is based on reporting that features expert sources including Kelly Short; Colleen Dennis; Rachel Reeves; Julie Westermann
SUPPOSE YOUR ELDERLY mother is struggling with day-to-day activities like laundry, cleaning and cooking. But she’s not truly ill and doesn’t need a high level of daily health care. She’s not ready to move into a nursing home, but you worry about her walking up and down stairs or carrying a bag of groceries. An assisted living facility may be the place for her.
What Is Assisted Living?
Assisted living is a type of housing that seniors move into when they are fairly healthy but need a bit of extra help, says Colleen Dennis, case management team manager with Genworth Insurance. “They typically provide room and board, meals and some level of nursing oversight. It is more advanced than independent living but less comprehensive than a nursing home,” she says, which provides skilled nursing services 24 hours a day, seven days a week.
Assisted living is a great intermediate step on the continuum of elderly care. But, like all health care, it’s expensive. According to Genworth’s 2018 Cost of Care Survey, the national median monthly cost of care in an assisted living facility is $4,000. Who pays? Usually, you do.
“Assisted living is primarily paid for by individuals’ private or personal funds, such as long-term care insurance or personal assets. Medicare does not cover long-term supports and services,” says Rachel Reeves, director of communications for the National Center for Assisted Living.
Medicaid may cover some costs, but the rules vary by state. “How the program is set up in each state determines how residents can use Medicaid to help pay for LTC in home- and community-based settings, such as assisted living communities,” Reeves says. About 1 in 6 assisted living residents relies on Medicaid to cover their costs, many of whom must spend down their personal assets first to qualify for Medicaid coverage, she adds.
That’s where long-term care insurance comes in. Most LTC insurance policies cover expenses at an accredited assisted living facility. “Everything is policy-dependent, but most assisted living facilities are private pay and can be reimbursed by LTC,” Dennis says.
Check Your Policy Carefully
LTC insurance premiums vary widely depending on where you live and how much coverage you want; the average is about $2,700 a year, according to AARP. Whatever you decide to purchase, you need to check the details of your policy carefully. “In general, long-term care insurance is flexible along the continuum of care. It can pay for assisted living, a nursing home or adult day care,” says Kelly Short, editor at SeniorLiving.org. However, she adds, some LTC policies are designated as facilities-only, meaning they won’t cover in-home assisted living services.
Short says that LTC insurance could cover 100% of your assisted living expenses, but that insurance is expensive in and of itself. “A general rule of thumb is that your insurance premium shouldn’t exceed 5% of your monthly income,” Short says.
A typical monthly insurance benefit is between $2,000 and $10,000. That median monthly assisted living cost of about $4,000 varies depending on amenities and location. And there are often additional fees for related services, such as physical therapy, laundry help, meals, dog walking and more.
There’s no federal definition for what constitutes assisted living – and laws and regulations vary significantly from state to state. “Generally, to be eligible for insurance benefits, a person needs to require help in at least two major activities of daily living such as bathing, dressing and eating,” Short says.
As a general rule, assisted living facilities accept private LTC insurance payments, but insurance companies don’t always approve of the facilities themselves. “The trouble comes in the other direction: Despite state licenses, an insurance company denies payment because an assisted living agency or facility doesn’t meet its standards,” Short warns. The company could deny coverage because it feels the center is too small or doesn’t have adequate staffing.
Whether there is a connection between state licensing and regulations and the insurance coverage depends on the policy requirements. “If the policy has assisted living facility benefits and requires a license, and the facility is licensed appropriately, then we can approve the facility,” says Julie Westermann, a Genworth Insurance spokesperson. Other insurers may have different rules, however.
Some states – but not all – require licensed assisted living centers to have registered nurses on staff 24/7. States also differ in the amount of education required of facility directors; “maybe the person needs a degree in health care administration, for example, or maybe nobody’s asking,” Short says. Regulations about training for other workers also vary, as do laws about facility cleanliness, meal preparation, organized social activities for residents and much more.
In addition, some states have different levels of licensure for assisted living facilities. One important advanced license to look for involves memory care or dementia care. “This sort of license lets an assisted living center keep caring for a resident even if he or she loses a good deal of independence,” Short says. “Choosing an assisted living center with an advanced license can help a person avoid the stress and expense of relocating again. It can also help couples maintain residence together.” The laws governing assisted living are numerous and they change often, she says, so it is wise to search online for state-specific information.
To find a covered facility, policyholders or their power of attorney can call their insurance company to request a provider inquiry, Westermann says. At Genworth, for example, it “will review up to three providers at a time. If, after those three have been reviewed and the insured or POA isn’t interested in any of those or the facilities wouldn’t be covered under their policy, then the policyholder can open up another inquiry of up to three providers,” she says.
You can appeal denied claims, but appealing can be a hassle. To ensure that payments will go through, Short advises working with a private LTC insurance representative beforehand and then with a consumer advocate at the facility. Most insurers will provide this service free of charge. “And for policyholders shopping for long-term care providers, such as ALFs, it’s important that they call their insurance carrier before deciding on an assisted living facility to make sure the provider meets the requirements of the policyholder’s policy,” Westermann says. Short agrees: “If there is any question about coverage for your condition under a LTC policy, be sure to make these inquiries before making any major moves.”
The goal of assisted living, Dennis says, is to keep the individual healthy and functional in that environment for as long as possible. “Assisted living facilities do a nice job of offering a wide range of services and can accommodate someone with functional needs for quite a while,” she says. “My biggest advice is to review your policy before moving into the facility. Compare the initial plan of care and evaluation with the policy, and call your insurance carrier prior to moving in to discuss that plan.”