What Is Short-Term Care Insurance?
A number of leading insurance companies now offer coverage that is often referred to as "Short-Term Care" or "Home Health Care" insurance. These policies are very attractive to individuals who can't afford traditional Long-Term Care policies.
The typical Short-Term Care insurance (STCI) policy provides coverage for 1 year or less. For many people, this is a very appropriate and affordable amount of coverage.
Although it's true that some long-term care claims last for many years, the National Advisory Center for Short-Term Care Insurance estimates that almost half (49%) of Long-Term Care (LTC) insurance claims last one year or less.
The majority of Short-Term Care policies have no waiting period and pay on the first day the policy holder qualifies for benefits. In contrast, over 90% of Long-Term Care policies have 90-day waiting periods that must be met before benefits are payable.
These policies can pay in addition to Medicare. Traditional Long-Term Care policies are prohibiting from doing so.
Short-Term Care policies can include benefits for home care, assisted living and nursing home care. The typical benefit amount is $100, $150, or $200 per day. The minimum applicant age is between 40 and 50 and the maximum age is between 85 and 89, depending on the carrier and the state.
The typical Short-Term Care premium at age 65 is $105 per month and is $141.00 monthly at age 70. This makes Short-Term Care an attractive option, particularly for those who can't afford traditional Long-Term Care insurance.
Short-Term Care policies are medically underwritten (that is they ask health questions that must be answered in order to qualify for coverage). Most Short-Term Care applications have 7-to-10 health questions. If you can answer "NO" to all the questions, you are 95% through the health underwriting process. However, there are policies that have only two "YES"/"NO" questions, and these policies can be ideal for people with existing health problems.
Who Should Consider A Short-Term Care Policy?
- Individuals who were declined for traditional LTC insurance.
- Those who want a less expensive option (than traditional LTC insurance).
- People who waited too long to buy LTC (i.e. the cost is now too high).
- Women. Rates for Short-Term Care policies are not gender based as they are with traditional LTC insurance. (Since women on average live longer than men, "unisex" premiums for men and women on Short-Term care insurance mean that these policies, on average, are less expensive for women than for men.)
- Individuals who have a LTC policy who want to have coverage during the LTC waiting period.