The life settlement industry is emerging as a popular option for seniors to receive cash payments through the sale of existing life insurance policies to third parties, who assume future premium payments and collect the death benefits upon maturity. The insurance company will require physicians’ statements and medical records attesting to the illness or loss of function before they will pay out any early benefits. The policy is not surrendered at the time of the cash advance, so the policy holder must continue to pay the premiums to guarantee the beneficiary receives what remains of the original death benefit. The owner of the policy must be terminally ill with a limited life expectancy (usually under 24 months) or be deemed unable to perform basic activities of daily living (ADLs). Some policies may feature an “accelerated death benefit” rider, which is a cash advance that is subtracted from the death benefit amount the beneficiary receives upon the death of the policy holder. Options include taking a loan from the policy’s cash value or surrendering the policy entirely in exchange for the cash value. There are a few ways that seniors who have life insurance policies can use them to pay for home care. Read: 8 Factors to Consider Before Buying Long-Term Care Insurance Using Life Insurance to Pay for Home Care According to the American Association for Long-Term Care Insurance, more than half (53.6 percent) of individual applicants age 75 and older were declined for traditional policies in 2019. Older seniors and those with chronic illnesses or serious medical conditions are unlikely to qualify for coverage. Premiums are lowest for healthy individuals in their fifties or sixties.
Plan ahead when it comes to building and purchasing a long-term care insurance policy. Keep in mind that assistance with the costs of personal home care may only be provided if the plan includes an allowance for non-medical services. Benefits vary depending on the plan, so it is important to clarify the services covered by the policy at the time of purchase. Long-term care insurance is a type of insurance purchased from private companies to cover the costs of nursing home care, assisted living and home health care. Read: Take the Confusion Out of Buying Medicare Supplemental Insurance Long-Term Care Insurance Benefits Cover In-Home Care If a senior does not meet Medicare’s requirements for home health care coverage, then a Medigap plan will not minimize out-of-pocket costs for these services. Neither Medicare nor Medigap policies are designed to pay for long-term care, so their coverage for in-home services is typically limited to medically necessary care over the short term. The supplemental policy is purchased from a private company to pay for the “gaps” in costs not covered by Medicare, such as copays and deductibles. Medigap Coverage of Home Care ServicesĪlso known as Medicare Supplement Insurance, Medigap is additional policy coverage that works alongside Original Medicare benefits (Parts A and B). Research prospective policies for the best coverage options.
Most forms of private insurance will not pay for non-medical home care services, and in-home skilled care is rarely covered at 100 percent. Private health insurance plans may pay for select elder care services, but coverage varies from plan to plan. Read: Does Medicare Pay for Home Health Care? Using Traditional Health Insurance Plans to Pay for Home Care A senior who is part of a Medicare Advantage Plan may have to use a certified home health care agency that participates in their plan’s network. Medicare only pays for services provided by an agency that meets its quality standards. Medicare-certified home health care agencies are companies contracted by Medicare to provide a host of covered home health services.
meal preparation, bathing assistance, housekeeping), will NOT qualify for Medicare coverage of these services. A senior who requires only non-medical care (e.g. In most cases, when ordered by a physician, Medicare Parts A and/or B will pay for medically necessary services provided in a home setting over the short term.
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