Long Term Care Insurance

The purpose of long-term care insurance is to make an unknown expense known. The cost of long-term care, whether at home or in an institutional setting, can be very expensive. To protect your financial assets from this expense, long-term care insurance is available.

When planning for long-term care, it is important to carefully evaluate your situation. If you are poor, you are likely to qualify for Medicaid. If you are very wealthy, the annual cost of a nursing home is not going to erode your estate. If you are somewhere in between, you should evaluate whether long-term care is right for you.

With all the terms and possible riders on long-term care insurance policies, most people prefer to have assistance in evaluating their options. Golden Trail Advisers helps its clients by developing the right specifications and reviewing quotes from different insurance companies with you. We take a process that can be confusing and boil it down to its main elements. Also, we can help you evaluate long-term care insurance in the context of your overall financial plan.

Some of the key terms related to long-term care are described in the links below.

This is the equivalent of a deductible. The elimination period is the number of days during which you pay out of your own pocket before your long-term care policy kicks in. All else equal, we favor long elimination periods. Most clients will be able to absorb the cost of six months in a nursing home. However, a multi-year stay is another matter.

This is the amount of money that the insurance company will pay each month toward the cost of long-term care. You should base the amount of your monthly maximum on the current cost of long-term care in your area. Expenses for long-term care vary widely by area.

There are several kinds of inflation protection, but only one can keep up with inflation: compound. Simple inflation protection cannot keep up with inflation. The cost for simple inflation protection is a lot less than compound. But this is an area where you do not want to cut corners.


The amount of time in months that the policy would pay your benefits. A benefit multiplier of 96 months would provide eight years of coverage. The best and most expensive option is to have an unlimited benefit multiplier, which provides coverage for as long as it is needed.

If a policy is structured in accordance with federal specifications, it offers certain federal tax advantages. The premium would be tax deductible up to a dollar amount that is determined in part by your age.

Discounts of about 40% are common for couples. The underwriting reason is that if one spouse is in need of care, the other spouse usually provides that care, at least initially.


Medicaid is the largest single payer of long term care expenses. The role of Medicaid is often confused with that of Medicare regarding long-term care coverage. In simple terms, Medicare pays an insignificant amount toward long-term care and Medicaid only pays if you are substantially out of money. To "qualify" for Medicaid, you are required to spend down your assets. However, if you have a long-term care policy, most states allow you to keep the amount of money that was paid by your long-term care policy.

Similar to life and other health insurance, long-term care cannot be purchased without a review of your medical history and a medical exam. Your age and level of health are important factors in the amount of premium you would pay.

Feel free to browse the 78-page "Shoppers Guide" prepared by the National Association of Insurance Commissioners: View here.


Golden Trail Advisers is qualified to assist you in evaluating alternatives for long-term care insurance and how they might fit with your overall financial plan. Unraveling the complexity of long-term care insurance can help you on your path to financial well-being.

Long Term Care Insurance