What Long Term Care Insurance Covers and What It Doesn't

Long term care insurance pays for help with daily living tasks when you can no longer do them yourself, but it does not cover regular medical treatment

Long term care insurance covers the cost of information with activities you do every day — bathing, dressing, eating, using the toilet, moving around — when illness, injury, or age makes those tasks impossible without help. It also covers some household tasks like cooking and cleaning. The insurance pays for care in your home, in an assisted living facility, in a nursing home, or in an adult day care center. It does not pay for hospital stays, doctor visits, prescription drugs, or medical equipment like wheelchairs or oxygen tanks — those are covered by health insurance instead.

The specific services covered depend on the policy you buy. Some policies cover only nursing home care. Others cover home care, assisted living, and nursing homes. A few cover memory care units specifically for people with dementia or Alzheimer's disease. The policy document lists exactly what the insurance company will and will not pay for, and you need to read that document before you buy.

Key Takeaways

• Long term care insurance covers help with bathing, dressing, eating, toileting, and moving around when you cannot do these tasks alone, but not medical treatment itself.
• Coverage varies by policy: some cover only nursing homes, while others include home care, assisted living, and adult day care.
• The policy document defines exactly which services are covered and which are not, and exclusions differ between insurers.
• Most policies require a waiting period (called an elimination period) before benefits begin, usually 30 to 100 days.
• Daily benefit amounts are capped — the policy pays up to a set dollar amount per day, and you pay anything above that.

What counts as a covered service

Long term care insurance covers what the industry calls activities of daily living, or ADLs. These are the basic tasks most people do without thinking: bathing, dressing, eating, using the toilet, moving from bed to chair, and controlling bladder and bowel function. If you cannot do at least two or three of these tasks without help (the exact number varies by policy), the insurance will begin to pay.

The insurance also covers instrumental activities of daily living, or IADLs, on some policies. These are tasks that let you live independently: cooking, cleaning, shopping, managing money, taking medication, and using the telephone. Not all policies cover IADLs, so check the document before you buy.

Coverage extends to different settings. Home care means a nurse or aide comes to your house. Assisted living means you move to a facility where staff help with ADLs but you do not need round-the-clock nursing. A nursing home provides 24-hour nursing care. Adult day care means you go to a center during the day for supervision and help with ADLs while a family member cares for you at night. Some policies cover all four settings; others cover only one or two.

What long term care insurance does not cover

Long term care insurance does not pay for medical care. That means it does not cover hospital stays, doctor visits, surgery, lab tests, X-rays, prescription drugs, or rehabilitation after an injury or stroke. Those expenses are the job of health insurance — Medicare, Medicaid, or a private health plan. If you need both medical care and help with daily living, you will use two different insurance policies to pay for them.

It also does not cover custodial care that is purely social or supervisory. If you need someone to sit with you because you have dementia but you can still bathe and dress yourself, some policies will not pay unless you also cannot do at least two ADLs. Memory care policies are an exception — they cover supervision and help with ADLs specifically for people with Alzheimer's disease or other dementias, even if the person can still do some daily tasks.

Long term care insurance does not cover care you receive from a family member unless that family member is a licensed professional caregiver. If your adult child bathes you and helps you dress, the insurance will not pay your child's wages. Some policies will pay an agency to send a caregiver to do the same work, but not family members doing it unpaid or as volunteers.

How much the insurance pays per day

Long term care policies set a daily benefit amount — the maximum the insurance company will pay in a single day. Common daily amounts are $100, $150, $200, $250, or $300, though some policies offer higher or lower limits. If your care costs $250 per day and your policy pays $200 per day, you pay the remaining $50 out of pocket.

The daily benefit amount does not change if you move between settings. If your policy pays $200 per day for nursing home care, it also pays $200 per day for home care or assisted living. Some policies adjust the daily benefit for inflation — usually by 3 or 5 percent per year — so the amount you are covered for grows over time. Others do not adjust, which means the benefit stays the same even as care costs rise.

Most policies also set a benefit period, which is how long the insurance will pay. A three-year benefit period means the insurance will pay for up to three years of care. A five-year benefit period covers five years. Some policies offer lifetime benefits with no time limit. The longer the benefit period, the higher the premium you pay.

The waiting period before benefits start

Most long term care policies include an elimination period, which is a waiting period before the insurance starts to pay. Common elimination periods are 30, 60, or 100 days. During this time, you pay all care costs yourself. After the elimination period ends, the insurance begins to pay up to the daily benefit amount.

The elimination period is measured from the day you first need care and meet the policy's definition of needing long term care — usually meaning you cannot do at least two ADLs without help. Some policies count only the days you actually receive care toward the elimination period. Others count calendar days whether or not you receive care that day. This difference matters: if your elimination period is 100 calendar days, it takes about 3.5 months to reach the start date. If it is 100 days of actual care and you receive care only three days per week, it takes much longer.

Exclusions and limits that vary by policy

Insurance companies exclude certain situations from coverage. Most policies do not cover care related to alcohol or drug abuse, or care you need because of a crime you committed. Some policies exclude care for mental illness or exclude certain conditions like Parkinson's disease or Huntington's disease. A few exclude care needed because of a pre-existing condition — an illness or injury you had before you bought the policy — though most states have laws limiting how long this exclusion can last.

Some policies require that you be cognitively impaired — meaning you have dementia or a similar condition — to receive benefits for supervision and help with ADLs, even if you cannot do those tasks. Others will pay if you cannot do the ADLs, regardless of whether you are cognitively impaired. The policy document spells out which definition applies.

A few policies limit coverage by diagnosis. They might pay for care after a stroke or heart attack but not for care related to arthritis or back pain. Others limit the number of hours per week a home care aide can visit. Read the policy document carefully to understand what situations are excluded and what limits explore to the care you think you might need.

How to read your policy document

The policy document — sometimes called the certificate of insurance or the summary of benefits — is the only source of truth about what your insurance covers. Marketing materials, the insurance agent's explanation, and the company's website can all be misleading or incomplete. The policy document is what the insurance company will actually use to decide whether to pay a claim.

Start with the section titled "Covered Services" or "Benefits." This lists what the insurance will pay for. Then read "Exclusions" or "What Is Not Covered" — this is where the insurance company lists what it will not pay for. Look for the definitions of "long term care," "activities of daily living," and "benefit period." Check the daily benefit amount, the elimination period, and whether the benefit adjusts for inflation. If you do not understand a section, call the insurance company and ask them to explain it in writing.

Frequently Asked Questions

Does long term care insurance cover Alzheimer's disease?

Most standard long term care policies cover care for Alzheimer's disease if you cannot do at least two activities of daily living without help. Some policies have specific memory care riders that cover supervision and help with daily tasks even if you can still do some ADLs on your own. Check your policy document to see whether it covers dementia and under what conditions.

Will long term care insurance pay for a nursing home if I need one?

It depends on your policy. Some policies cover nursing home care but not home care or assisted living. Others cover all three settings. The policy document lists which care settings are covered. If your policy covers nursing homes, it will pay up to the daily benefit amount toward the cost, and you pay anything above that.

Does long term care insurance cover physical therapy?

No. Physical therapy is medical treatment, which is covered by health insurance, not long term care insurance. Long term care insurance covers help with daily living tasks like bathing and dressing, not medical services like therapy or rehabilitation.

What happens if I need care but my policy has already paid out the full benefit period?

Once the benefit period ends, the insurance stops paying. If your policy has a three-year benefit period and you need care for four years, the insurance covers the first three years and you pay for the fourth year yourself. This is why some people buy policies with five-year or lifetime benefit periods, though those cost more.

Can I use long term care insurance to pay a family member to care for me?

Most policies will not pay family members for care, even if they are doing the work of a professional caregiver. Some policies will pay an agency to send a caregiver to your home, and you can choose to have a family member be that caregiver if the agency allows it, but the payment goes to the agency, not to your family member directly.