Long-Term Care Insurance (LTCI): Definition & Features

Instructor: Noel Ransom

Noel has taught college Accounting and a host of other related topics and has a dual Master's Degree in Accounting/Finance. She is currently working on her Doctoral Degree.

This lesson describes the basic features of Long Term Care Insurance (LTCI) and what aid LTCI covers that is not covered by basic healthcare insurance.

Accidents Happen

Matthew's father was recently in an accident. Thankfully, his father survived and recovered quickly. Unfortunately, Matthew's father continues to suffer from back and neck pain that caused him to be permanently disabled. As a result, Matthew's father is not able to continue working at his job and has trouble dressing and getting in and out of bed.

Matthew is concerned that his father will not be able to care for himself much longer and will need someone to assist him. Matthew begins to research various options for his father's care.

What is Long Term Care?

Matthew's father needs Long Term Care, which is assistance for individual's who are not able to complete activities of daily living (ADL). Activities of daily living are basic daily tasks such as dressing, walking short distances, getting in and out of bed or a shower, eating and bathing. Matthew needs to find a licensed individual to assist his father with activities of daily living on an ongoing basis.

Long Term Care Insurance

As Matthew conducts his research of Long Term Care, he discovers his father has Long Term Care Insurance (LTCI). LTCI is an insurance policy that helps pay for the costs of long-term care. Long-term care can be very costly, therefore, an insurance policy to cover some of the costs of care can be extremely helpful. This insurance usually covers care that medical healthcare insurance does not cover and so is considered supplemental insurance. Policies reimburse individuals for long-term care services.

Who Qualifies?

Long-term care is not only for the elderly but for anyone who cannot perform the basic activities of daily living. However, some exceptions apply:

  • individuals who have pre-existing conditions that indicate they may need long-term care in the future may not qualify for coverage.
  • individual with a degenerative disease such as a heart disease or multiple sclerosis, the individual may not qualify for LTCI.
  • individuals with mental disorders are likely to be disqualified for LTCI.

As Matthew continues to conduct his research, he also finds a study from John Hancock Insurance company saying that over 200,000 individuals in the United States received long-term care benefits in 2011. Individuals do not have to reach retirement status or be of retirement age to receive long-term care benefits, which is lucky, because Matthew's father is only 58.

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