Explainer: What is Long-Term Care Insurance?

It’s not something you want to think about, but most of us will need long-term care at some point in our lives. In fact, according to the U.S. Department of Health and Human Services (HHS), once a person reaches age 65, they have almost a 70% chance of needing some type of long-term care services in their remaining years.1

The need for care may develop suddenly after a major health event like a heart attack, stroke or injuries from a car accident. Or it could develop gradually as you age. Either way, planning ahead with a long-term care policy from ERIE FAMILY LIFE INSURANCE COMPANY can help protect you and your family from the high costs of long-term care.

Wondering whether long-term care insurance is right for you? Here are answers to some of the most common questions about long-term care insurance.

What is Long-Term Care?

The phrase long-term care is an umbrella term used to describe a wide range of services that are necessary to meet someone’s health or personal care needs over an extended period of time.

These services could be medical, such as care provided through home health care or a nursing home. But long-term care services can also assist people with normal daily activities, such as dressing, bathing and using the bathroom. It can even include community services such as meals, adult day care and transportation services.

What is Long-Term Care Insurance?

Assistance with either medical or personal care needs comes with a cost. According to HHS data, the average home health aide costs about $20 an hour and a private room in a nursing home runs an average of $7,968 each month.2

Long-term care insurance is designed to help you cover costs such as these. It makes money available to pay for the personal care you need, including assisted living, home health care or a long-term care facility.

Does Medicare Cover Long-Term Care?

Medicare is designed to cover medically necessary care for people age 65 and older, such as hospital stays and doctor visits. But aside from short nursing home stays following a hospitalization or services specifically prescribed by a doctor, most long-term care is considered “custodial care.” That means it won’t be covered by Medicare or private health insurance – potentially leaving you 100% responsible for the bill. Medicaid may provide limited long-term care resources, but only after all your personal assets have been depleted.

How Much is Long-Term Care Insurance?

There are several types of long-term care insurance available on the market. You can buy a standalone long-term care insurance policy, but this coverage can be expensive and require substantial underwriting.

At Erie Family Life Insurance Company, we offer what’s called a long-term care accelerated death benefit (LTC) rider3 as an optional add-on to qualifying Whole Life insurance policies. This rider allows your life insurance to provide financial support if you need hands-on daily care from a nurse or a health aide for long periods of time.

In many ways, this coverage offers the best of both worlds: financial security for your family if you pass away, and protection from the high costs of long-term care if you need it. When you add a LTC rider to a Whole Life policy, you’ll have the convenience of working with one company and paying one premium. Both our Whole Life and Long-Term Care premiums are guaranteed and will not increase. And because it’s an add-on to your life insurance, this valuable coverage may cost less than you think.

How Does Long-Term Care Insurance Work?

At Erie Family Life, our long-term care rider keeps you in the driver’s seat by providing flexible access to a portion of your policy’s death benefit when you need it.

Here’s how it works:

  • A licensed health professional certifies your eligibility for long-term care benefits under the policy.
  • You choose a monthly distribution of 2, 4 or 8 percent of the policy death benefit (must be at least $1,000).
  • Erie Family Life sends a check each month to use as you see fit.

You can collect monthly payments as long as you meet the eligibility criteria as laid out in your policy.4

What Are the Eligibility Requirements for Long-Term Care Insurance?

Under our long-term care rider, your benefits are triggered when a licensed health professional5 certifies that you are unable to complete at least two activities of daily living independently, such as bathing, dressing, eating, using the bathroom or moving in or out of a bed.6

What Does Long-Term Care Insurance Cover?

With a long-term care rider from Erie Family Life, you’ll have the flexibility to use your money for what you need, as long as you continue to meet the eligibility criteria outlined in your policy. You can use your benefit to pay for anything from home health care and meal deliveries to an assisted living, adult day care or skilled nursing facility. We’ll send your check each month without strings attached – no expenses to qualify or receipts to submit.

Are Long-Term Care Benefits Taxable?

Generally, any payments made from your long-term care insurance policy will not be taxed as income. But because tax laws vary from state to state, you should consult a tax attorney or accountant to make sure.7

Is Long-Term Care Insurance Worth it?

Like any type of insurance, determining whether long-term care insurance is “worth it” will depend on your personal financial situation. We’ve already established that 70% of older adults will need some type of long-term care during their lifetime1 – and that out-of-pocket expenses may vary depending on if you have a long-term care plan and what it covers.8 So unless you’ve built up a significant net worth and can comfortably afford to finance your own long-term care, you’ll likely find long-term care insurance to be well worth the investment.

Protection That’s There When You Need it

Life insurance is about making sure your family is taken care of when you’re gone. But Erie Family Life’s long-term care rider can take care of you while you’re here, too. Call your local ERIE agent today to get a no-obligation quote, and learn how planning now can help protect your family from the high costs of long-term care later. 

This is a solicitation of insurance. An agent (or the company) may contact you. Purchase of coverage is subject to medical exam and underwriting approval. The policy has terms, limitations and exclusions under which the policy may be continued in force or discontinued. For costs, complete details and licensure information, contact an ERIE agent.

ERIE® insurance products and services are provided by one or more of the following insurers: Erie Insurance Exchange, Erie Insurance Company, Erie Insurance Property & Casualty Company, Flagship City Insurance Company and Erie Family Life Insurance Company (home offices: Erie, Pennsylvania) or Erie Insurance Company of New York (home office: Rochester, New York).  The companies within the Erie Insurance Group are not licensed to operate in all states. Refer to the company licensure and states of operation information.

The insurance products and rates, if applicable, described in this blog are in effect as of July 2022 and may be changed at any time. 

Insurance products are subject to terms, conditions and exclusions not described in this blog. The policy contains the specific details of the coverages, terms, conditions and exclusions. 

The insurance products and services described in this blog are not offered in all states.  ERIE life insurance and annuity products are not available in New York.  ERIE Medicare supplement products are not available in the District of Columbia or New York.  ERIE long term care products are not available in the District of Columbia and New York. 

Eligibility will be determined at the time of application based upon applicable underwriting guidelines and rules in effect at that time.

Your ERIE agent can offer you practical guidance and answer questions you may have before you buy.