Is memory care covered by long-term care insurance?

According to the Alzheimer's Association, more than 6 million Americans are living with Alzheimer's disease, a condition often requiring specialized memory care. The high cost of this specialized care often leads people to wonder: is memory care covered by long-term care insurance? The answer is yes, but coverage depends on the specific policy details, eligibility triggers, and when the policy was purchased.

Quick Summary

Long-term care insurance can cover memory care, but only if the policy was secured before a dementia diagnosis. Coverage depends on policy terms, benefit limits, and the individual meeting specific triggers like a severe cognitive impairment or the inability to perform daily living activities.

Key Points

• Pre-Existing Condition Clauses: You must purchase long-term care insurance before being diagnosed with dementia to secure coverage, as pre-existing condition clauses typically deny coverage post-diagnosis.

• Cognitive Impairment Trigger: Benefits for memory care are often triggered by a doctor's certification of a 'severe cognitive impairment' requiring substantial supervision for safety.

• ADL Trigger: Another common trigger for benefits is the inability to perform at least two 'activities of daily living' (ADLs), such as bathing or dressing, for at least 90 days.

• Covered Services Vary: Policies can cover different types of memory care, including specialized facility care, in-home care services, and adult day programs, depending on the specific terms.

• Check Policy Details: It is essential to review the policy's fine print, including daily benefit maximums, lifetime limits, and the elimination period, to understand the extent of coverage.

• Not Covered by Standard Medicare: Regular Medicare does not cover the long-term custodial care provided in memory care facilities, reinforcing the need for specific LTC coverage.

• Inflation Protection: Be aware of your policy's inflation protection. Some policies increase benefits over time to keep pace with rising care costs, while others do not.

• Explore All Options: Don't rely solely on LTC insurance. Other options like personal savings, veteran's benefits, or Medicaid (for low-income individuals) should also be considered.

Understanding Long-Term Care Insurance and Memory Care

Long-term care (LTC) insurance is designed to cover services that are not typically paid for by regular health insurance or Medicare. This includes assistance with daily living activities (ADLs) and supervision for cognitive impairments. Because memory care facilities provide this level of custodial care, many LTC policies are designed to cover these services, but coverage is not automatic.

Key to determining coverage is when the policy was purchased. If a dementia diagnosis like Alzheimer's or other related cognitive impairments has already been made, it is highly likely that an insurance company will deny coverage due to pre-existing condition clauses. It is therefore crucial to obtain LTC insurance well before any symptoms of memory loss appear.

How Do You Qualify for Benefits?

To access benefits for memory care, the policyholder must meet specific eligibility requirements, or "triggers," defined in their policy. For tax-qualified policies, these are often defined by federal standards.

• Severe Cognitive Impairment: The most common trigger for memory care is a certified diagnosis of severe cognitive impairment. A licensed healthcare practitioner must certify that the individual requires substantial supervision to protect against threats to their health and safety due to this impairment.
• Inability to Perform Activities of Daily Living (ADLs): Another trigger is the inability to perform a certain number of ADLs without substantial assistance. Policies typically require the inability to perform at least two of the six ADLs for a period of at least 90 days. The six ADLs are:
  • Bathing
  • Dressing
  • Eating
  • Toileting
  • Continence
  • Transferring (moving in and out of a bed or chair)
• Plan of Care: A licensed healthcare practitioner must also prescribe a written plan of care that includes the qualified long-term care services.

What Memory Care Services Are Covered?

If a policyholder qualifies for benefits, their LTC insurance can pay for a variety of memory care services, which vary depending on the specific policy.

• Memory Care Communities: Coverage can include the costs of residential care in specialized memory care units within assisted living facilities or in dedicated memory care facilities.
• In-Home Care: For those who wish to remain in their homes, LTC insurance may cover the cost of in-home care services from a trained caregiver.
• Adult Day Programs: Some policies will reimburse for structured daytime care at an adult day program, which offers supervision and activities for seniors with dementia.
• Respite Care: Certain policies also cover short-term respite care, allowing family caregivers to take a break while ensuring their loved one is safely and professionally cared for.

Comparison of Long-Term Care Insurance and Other Payment Methods

To help understand your options, here is a comparison of different ways to pay for memory care, including long-term care insurance.

Feature	Long-Term Care Insurance	Medicare	Medicaid	Out-of-Pocket/Savings
Coverage of Custodial Care	Yes, specifically designed to cover it.	No, does not cover long-term custodial care.	Yes, for eligible, low-income individuals in approved facilities.	Yes, funds can be used for any care needed.
Application Timing	Must be purchased before a dementia diagnosis.	Eligibility is based on age (65+) or disability.	Varies by state; strict income and asset limits apply.	Available anytime, but depends on financial resources.
Benefit Triggers	Cognitive impairment or inability to perform ADLs.	Requires a qualifying 3-day hospital stay and skilled medical need.	Strict functional and financial criteria based on state rules.	No triggers; depends on available cash.
Facility Choice	Broad choice of licensed facilities, in-home care, etc..	Limited to skilled nursing facilities for specific post-hospital care.	Limited to Medicaid-approved facilities; not all memory care communities accept it.	Unrestricted; choice depends on personal finances.
Typical Costs Covered	Room and board, personal care, therapies, supervision.	Medically necessary services, therapies, and medications.	Care services in Medicaid-approved nursing homes; varies for assisted living.	All costs, depending on personal wealth.

How to Verify Your Policy’s Coverage

If you or a loved one already have a long-term care insurance policy, it is essential to review it carefully to confirm its provisions for memory care. Here are steps you can take:

1. Read the Policy Document: Look for specific language regarding coverage for “severe cognitive impairment,” “Alzheimer’s disease,” or “dementia”.
2. Contact the Insurer: Call the insurance company's customer service line to ask specific questions about memory care benefits, including eligibility triggers, benefit maximums, and any limitations.
3. Review Benefit Limits: Check the policy's daily or monthly benefit amount and the lifetime payout maximum. Also, be aware of the "elimination period," a waiting period during which the policyholder must pay for care out-of-pocket before benefits begin.
4. Consult an Expert: If the policy language is confusing, consider seeking assistance from a financial advisor or an insurance agent specializing in long-term care.

Other Factors and Costs

Even with LTC insurance, it's important to be aware of other potential costs. Inflation-protection riders can increase the daily benefit amount over time, but not all policies include them. Additionally, premiums for LTC insurance can increase over time, so it's important to plan for this possibility. Families should also explore other potential funding sources, such as veteran's benefits and personal savings, to create a comprehensive financial strategy.

Conclusion

Long-term care insurance can be a critical tool for covering the expensive and specialized services required for memory care, but it is not a guaranteed solution. Coverage is conditional on purchasing the policy before a dementia diagnosis and meeting specific benefit triggers outlined in the policy. It is vital to review existing policies or carefully select a new one with memory care in mind. By understanding how LTC insurance works, along with its limitations, families can better prepare for the financial challenges associated with memory care.

Frequently Asked Questions

Can I get long-term care insurance if I already have a dementia diagnosis?

No, it is extremely difficult to get long-term care insurance once you have a dementia diagnosis. Policies typically have strict pre-existing condition clauses and require medical underwriting during which a diagnosis would likely lead to a denial of coverage.

What is the difference between custodial and skilled care?

Custodial care involves providing assistance with daily living activities (ADLs) and supervision, which is what memory care largely entails. Skilled care, which is sometimes covered by Medicare, requires the services of licensed nurses or doctors for medical treatments.

Will my long-term care policy cover in-home memory care?

Yes, many long-term care policies cover in-home care services, but you must check the specifics of your policy. Coverage may depend on who provides the care, with some policies requiring a professional service.

What is an 'elimination period' for a long-term care policy?

The elimination period is a waiting period, defined in your policy, during which you must pay for care out-of-pocket before the insurance benefits begin. This period can range from 0 to 120 days or more.

Are long-term care insurance premiums guaranteed not to increase?

No, long-term care insurance premiums are not guaranteed and can increase over time. This potential for premium hikes is a major factor to consider during financial planning.

How do I know if my cognitive impairment is severe enough to trigger benefits?

A licensed healthcare practitioner must certify that the cognitive impairment is severe enough to require substantial supervision for safety. A diagnosis of dementia or Alzheimer's can meet this requirement, but a formal certification is necessary to start benefits.

Can I use long-term care insurance benefits for adult daycare?

Some long-term care policies do cover adult daycare programs. These benefits can help if the individual with dementia is living at home and their caregiver needs daytime relief.