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Does health or disability insurance cover long-term care?
According to LongTermCare.gov, there's a common misconception that medical insurance will cover most of the costs of long-term care. Most private health insurers and health maintenance organizations (HMOs) exclusively cover skilled, short-term, medically-required care. Many private health insurers do not cover custodial care.
Disability income insurance, on the other hand, is designed to replace your income in the event an illness or injury renders you unable to work, not to cover long-term-care expenses. In the event your disability also requires long-term care services, the cost of care may add up.
What can exclude you from long-term care insurance?
Insurance companies price risk differently, which means some may be more lenient than others when it comes to certain risk factors. In general, long-term care insurers will pay special attention to your medical history and any family history of debilitating illness.
Being in poor health or needing help with daily living activities could make it harder to get approved for coverage or to qualify for lower premiums.
How do state long-term care insurance partnership plans work?
Many states have partnerships with long-term care insurance companies that incentivize people to purchase long-term care. Participating insurance companies agree to specific provisions in their partnership policies that financially protect policyholders who exhaust their benefits and want to request Medicaid.
Before Medicaid starts paying benefits, it will require you to exhaust most of your assets -- the specific amount varies by state. Partnership programs protect your assets up to the equivalent of your long-term care policy's total benefit amount.
For example, if your state requires you to spend your assets down to $1,500 and you have a long-term care insurance benefit that is partnership-approved for $500,000, you would be able to maintain up to $501,500 in assets and still qualify for Medicaid.