Nursing home insurance, often referred to as long-term care insurance, has been a popular topic in the news for the past few years. Premiums continue to rise, and many of the big-name insurance company providers have stopped offering nursing home insurance altogether in favor of health coverage or long-term care coverage.
This makes it even more important to do some research before selecting a health care insurance policy in 2018 that will ensure nursing home care in the long term. To help you get started, we’re breaking down nursing home insurance and showing you some of the better options out there.
According to The American Association for Long-Term Care Insurance, the rates for the same coverage varied by up to 94% among different insurers in 2016, so keep this in mind when considering our top-rated options.
How We Selected the Best Nursing Home Insurance Plans of 2018
Although we will all need some form of assistance as we live out our golden years, there is no concrete way to find out how much care we will require. The United States Department of Health and Human Services tells us that about 70% of Americans at or above the age of 65 will eventually require some form of long-term care; 20% may need it for a period of five years or more.
Unfortunately, nursing homes are the most expensive form of long-term care. According to the Long-Term Care Group, Nursing home residents pay an average of $90,000 per year. Those that need only weekly or once-daily assistance at home pay much less at $12,000 to $59,000 per year.
There are actually multiple different types of long-term care and nursing home insurance policies. The most widely used are still the stand-alone insurance plans, so we focused on these when making our picks. However, hybrid policies that combine nursing home insurance with life insurance policies are growing in use.
All of the plans we chose are available in more than 30 states and none of them have special requirements for eligibility. Here are some other things we found important during our decision-making process:
The benefit period of a policy refers to the period of time the policy will pay after your claim is processed. It is very important when thinking about how long you may need long-term care. Although “lifetime policies” are almost impossible to find in today’s market, you should still place a priority on a benefit period of at least two years.
Data has shown that the average person actually requires approximately three years of care, so a three-year benefit period would be great if it’s financially feasible for you. If you can’t afford a policy with a three-year benefit period, a two-year benefit will still be very helpful. It can mean the difference between being forced to sell all your assets to pay for extended care.
A Standard “Waiver of Premium” Provision
Insurance policies typically require you to pay premiums even while collecting the benefits. This applies to almost all auto and homeowner’s policies. However, nursing home insurance should be different in this area.
When this type of insurance starts paying out, it usually means that you’re on a limited and fixed income. The “waiver of premium” provision removes the requirement for paying premiums after a claim is processed. This can be a big deal, so each of our top-rated options offer this provision standard.
The Availability of “Shared Care”
The “Shared Care” option allows couples to pool their coverages together so that, if a portion of one partner’s benefits goes unused, they can be transferred over to the others payout. This option could save you a significant amount of money by reducing the length of your policies. It may even make a three-year benefit period much more affordable for you.
There is a potential risk with “shared care” policies. If the first person that requires care ends up using all of the benefits for both partners, it can be a big problem for the remaining individual. However, the amount of value in the flexibility provided by this option outweighs the risk.
Overall Financial Strength
Finally, the most important factor to consider among nursing home insurance plans may be the providers’ financial strength ratings. After all, you need to be extremely confident that the provider will have the ability to pay all of its claims.
Although there are three respectable, independent rating agencies, only one (A.M. Best) provides ratings strictly for insurance. You should look for a rating of at least A- when searching for a provider with this agency.
For the Standard and Poor rating system, choose providers with ratings at AA- or higher. For Moody’s, look for Aa or higher.
Best Nursing Home Insurance Plans of 2018
Mutual of Omaha
There are two primary reasons why Mutual of Omaha’s nursing home insurance plans are the best. They offer unrivaled flexibility with policy options and provide an important bonus feature. This bonus feature involves how they count the elimination period.
Mutual of Omaha counts calendar days—not service days—for the elimination period. It is one of the only companies that offer this feature.
So Why Does the Elimination Period Matter?
When it comes to nursing home insurance policies, the elimination period refers to the length of time a senior has to wait before they start to receive benefits. Since you’re required to pay for care on your own until the end of the elimination period, policies with shorter elimination periods are generally more expensive. The most common elimination period is 90 days.
Most nursing home insurance plans count their elimination periods in the amount of accumulated “service days.” This means that you must prove that you actually received care on a particular day before it will reduce the total elimination period. Plans that count “calendar days” start paying out exactly 90 days after the approval of your claim. It doesn’t matter if you actually received care on each day. This not only shortens your waiting period (and, therefore, saves you money), but it also takes away the burden of organizing receipts.
After these two important factors, Mutual of Omaha also offers a few other notable features. They offer benefit periods as long as five years and as short as two years. They also empower policyholders with more choice in the design of their policies with their “pool of money” model.
It is also important to note that Mutual of Omaha does not require that caregivers be part of an agency. This means that you can use an independent home caregiver that offers the same level of care for a reduced rate.
While their standard features may not be as amazing as Mutual of Omaha’s, Transamerica is another great option for nursing home insurance.
Their “cash alternative” payout is capped at 30% of the maximum monthly payout versus Mutual of Omaha’s at 40%. They also require you to hire an agency to provide in-home care.
On the bright side, Transamerica does use the “pool of money” model to allow flexible options for policyholders. They also sell policies with total benefits as low as $18,250, so almost anyone can afford a Transamerica policy.
Transamerica and Mutual of Omaha both start reimbursing home care costs immediately and require no waiting period for these services.
When compared to many of the companies offering the best nursing home insurance policies, MassMutual stands out as the one with the highest financial strength ratings. However, it falls a little short on the flexible policy options debate.
Although MassMutual does offer a similar zero-day period for waiting on benefits to pay for home care, it is not a standard feature, and it costs extra. Since they don’t offer a “cash alternative” option for benefits, policyholders will be required to submit receipts for all care received.
There are some other limitations with MassMutual, but there are also some advantages. For example, MassMutual is one of the only providers to offer a six-year benefit period for nursing home insurance, and the company does cover home care services from caregivers not associated with an agency.
Avoiding Big Mistakes When Choosing A Nursing Home Insurance Plan
There are two big features that many people overlook when selecting a nursing home insurance provider.
The costs of long-term care are already increasing every year on their own so, if you don’t protect yourself from inflation, your policy could become worth less. Simply explained, inflation will most likely increase the price of quality care well past the amount your payout will provide.
Choice of Care
Having the ability to choose which type of care you receive is extremely important. Think about what it would be like to be move into a nursing home just because it’s the only thing your insurance will cover, even if in-home care could easily handle the level of care you require.
When it All Boils Down…
At the end of the day, the best nursing home insurance plan for you will almost certainly be different than the best plan for another individual. You just need to do some research, shop around, and consider partnering with an independent insurance agent to ensure you see all of your options.
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Variance Among Different Insurance Rates for the Same Coverage in 2016
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