What is long-term care insurance? An Arizona guide

Long-term care insurance pays for help with everyday activities, such as bathing, dressing, eating and moving around, when a chronic illness, injury or cognitive decline means you cannot manage them on your own. It can pay for that care at home, in adult day care, in assisted living or in a nursing home. It exists because Medicare and regular health insurance do not pay for this kind of custodial care, and the need is common: the federal LongTermCare.gov site says someone turning 65 today has almost a 70% chance of needing some type of long-term care in their remaining years. In Arizona, the public safety net is ALTCS, which has strict financial rules, so insurance is how many families keep choices in their own hands.

What long-term care actually is

Long-term care is mostly not medical. It is help with what professionals call activities of daily living: bathing, dressing, eating, using the toilet, continence and transferring in and out of a bed or chair. It also includes supervision for someone with dementia who would be unsafe alone.

Most of it happens at home, from family members and paid caregivers. It can also happen in an adult day program, an assisted living community or a nursing home. The need often lasts months or years, not weeks.

In Arizona, families often piece care together: a spouse provides most of it, an adult child helps on weekends, and a home care agency fills in a few hours a week. When the need grows, assisted living or memory care may follow. A long-term care plan should cover that whole path, not only a nursing home.

What Medicare and health insurance do not cover

Medicare.gov is direct about it: Medicare does not pay for long-term care, also called custodial care, and neither do most health insurance plans or Medicare Supplement policies. You pay for non-covered services, including most long-term care, yourself.

Medicare does pay for short stays in a skilled nursing facility after a qualifying hospital stay, when you need daily skilled care such as therapy or wound care to recover. That is rehabilitation, it has a limit of up to 100 days per benefit period, and it stops when skilled care is no longer needed, even if you still need help with daily living.

How a long-term care policy is built

When you buy a traditional policy, you choose the building blocks. Each one moves the premium up or down.

Your choices should reflect how you would actually want to receive care, which for most people means at home for as long as possible.

Benefits usually start when a licensed health care practitioner certifies that you need help with at least two of the six activities of daily living, or that you have a severe cognitive impairment, expected to last at least 90 days.

ALTCS: Arizona’s public long-term care program

In Arizona, Medicaid long-term care is provided through the Arizona Long Term Care System, known as ALTCS, which is run by AHCCCS. According to AHCCCS, ALTCS serves people who are 65 or older, blind or disabled and who need ongoing services at a nursing facility level of care. Many ALTCS members receive that care at home or in assisted living rather than a nursing home.

ALTCS has medical and financial eligibility rules, including limits on income and countable resources, and AHCCCS can seek recovery from a member’s estate after death. For many middle-income families, that means spending down savings before help begins. Long-term care insurance is how people plan to pay for care while keeping more of their savings and more say over where and how they receive care.

The Arizona Long Term Care Partnership Program

Arizona has a Long Term Care Partnership Program. The Arizona Department of Insurance and Financial Institutions certifies which policies qualify, and AHCCCS applies the benefit when someone later applies for ALTCS.

Here is why it matters. If you own a qualified Partnership policy and use its benefits, and you later need to apply for ALTCS, an amount of your assets equal to the benefits the policy paid can be disregarded when ALTCS counts your resources, and AHCCCS will not recover that same amount from your estate. Partnership policies must include inflation protection and meet other federal and state requirements. Arizona also honors qualified Partnership policies bought in other states.

Why the age you buy matters

Look closely at inflation protection. A benefit that looks generous today may cover far less in twenty years if it never increases. Partnership policies in Arizona must include inflation protection, which is one reason they are often a good fit for younger buyers.

• Premiums are based largely on your age when you apply, so they are lower the younger you are.
• You must qualify on health. Once a serious condition develops, coverage may no longer be available.
• Traditional policies are guaranteed renewable: the insurer cannot cancel your coverage as long as you pay, though premiums for a whole class of policyholders can rise with state approval.
• Many people look at coverage in their 50s, while they are healthy and still earning.

How much coverage is enough

There is no single right amount. The cost of care differs a great deal by the type of care and where you live, and the East Valley is not the same as rural Arizona or another state you might move to. Start with how you would pay today: your income in retirement, your savings, family who could help, and any home equity. Then decide how much of the risk you want to insure and how much you can carry yourself.

LongTermCare.gov notes that women tend to need care longer than men, on average 3.7 years compared with 2.2 years, which is one reason couples often consider shared care.

Short-term care insurance: a smaller option

Short-term care insurance covers care for a year or less. It usually has simpler health questions than a traditional long-term care policy and a shorter waiting period before benefits start, and it can pay alongside Medicare during a recovery. It will not protect you from a long illness such as dementia, but it can be a practical choice for people who cannot qualify for, or do not want to pay for, full long-term care coverage.

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The bottom line

Long-term care planning is about keeping your choices: where you live, who cares for you and what you leave behind. Visit our Long-Term Care Insurance page, then talk with Viola. She is Certified in Long-Term Care (CLTC), and she will walk you through traditional, hybrid and Partnership options, subject to underwriting, without pressure.