How Long Term Care Insurance Works When You Move Into Assisted Living

Most of the families I meet who own a long term care policy have never read it. Dad bought it in his fifties, the premium came out of the checking account every quarter, and the folder went into a drawer. Then Mom needs assisted living, somebody remembers the policy, and the questions start. Does it pay for this? When does it start? Who sends the bill? I am not an insurance agent and I do not sell policies, but I sit with families on move in day and watch these policies either work or disappoint, so I can tell you how they behave.

Here is the short version. You pay premiums for years while you are healthy. When you can no longer do a set number of daily activities on your own, or you have a cognitive impairment that requires supervision, the policy is triggered. You then wait out a period of days that you fund yourself, and after that the insurer reimburses a set amount per day or per month toward the cost of care in a setting the policy recognizes, until the benefit runs out. Every one of those steps has a detail that matters at a Long Island community, and that is what this post is about.

The short answer: premiums now, reimbursed care later, with conditions

A traditional long term care policy is a promise to reimburse a portion of the cost of help with daily living once you meet the policy’s definition of needing that help. It is not health insurance. It does not pay the doctor, the hospital or the pharmacy. It pays toward the aides, the supervision and the care services that Medicare does not cover, which I explain in does Medicare cover long term care.

Three things make it different from the insurance people are used to. First, there is a trigger: you have to prove you need care, not just want it. Second, there is a waiting period, called the elimination period, during which you pay the full cost yourself. Third, there is a cap, expressed as a daily or monthly benefit and a total benefit pool, and once it is used up the policy is done. Families who understand those three mechanics before the move make far better decisions on which community to choose and how to budget. My assisted living on Long Island guide explains how communities structure their fees, which is the other half of the math.

What counts as long term care under a policy

Under nearly every policy sold in the last twenty five years, long term care means help with the activities of daily living, or supervision because of a cognitive impairment. The activities of daily living are the six basics: bathing, dressing, eating, transferring from a bed or chair, using the toilet, and continence. Most policies trigger when a licensed professional certifies that you need substantial help with two of the six, and that the need is expected to last at least 90 days. I wrote a plain guide to these in an essential guide to ADLs and IADLs.

The second trigger is the one that matters most for the families I work with. If a person has a cognitive impairment, usually dementia, and needs supervision to stay safe, the policy can trigger even if they can still dress and feed themselves. That is why early stage memory care residents often qualify while an assisted living resident with mild arthritis does not. The policy is paying for the need, not the diagnosis.

What does not count: needing help with the instrumental activities like cooking, shopping, driving and managing medications. Those are the reasons people move into independent living, and no policy I have seen pays for independent living rent. Once a person needs hands on help or supervision, the policy becomes relevant, and that is also the point where assisted living or memory care becomes the right setting.

The moving parts of a policy, and what each one does on move in day

Every traditional policy has the same handful of parts. Here is what each one means and what it does at a Long Island community.

Policy term	What it means	What happens at the community
Benefit trigger	The condition that starts the policy: usually two of six daily activities or a cognitive impairment that needs supervision	The community’s nurse assessment and the doctor’s statement become the evidence
Elimination period	A waiting period measured in days of care, often 30, 60 or 90, before payments begin	The family pays the full monthly fee during the wait; ask whether days at home with an aide count
Daily or monthly benefit	The most the policy reimburses per day or per month	If the fee is higher than the benefit, the family pays the gap every month
Benefit period or pool	How long the benefit lasts, often stated in years, or a total dollar pool	Decides whether the policy covers a short stay or several years
Inflation protection	A rider that grows the benefit each year	Without it, a policy from 2004 may cover a fraction of today’s fee
Covered settings	The facility types the policy will pay in	The community must meet the policy’s definition; most licensed assisted living on Long Island does, but you confirm
Waiver of premium	Premiums stop once you are on claim	Usually begins after the elimination period; ask so you do not keep paying
Care coordination	A nurse or care manager the insurer provides to build the plan of care	Can help with paperwork; sometimes required before payment starts

The two parts that cause the most trouble are the elimination period and the monthly benefit. Families forget that the elimination period has to be paid out of their own pocket, and they are surprised that a benefit that looked generous when it was bought does not cover a current fee. Pull those two numbers out of the policy before you tour anything.

How a claim works when you move into assisted living

The claim is a paperwork process with a predictable order. The families who do the steps in this order get paid sooner and with less back and forth.

1. Find the policy and the schedule of benefits page. Note the trigger, the elimination period, the daily or monthly benefit, the benefit period and the definition of a covered facility.
2. Call the insurer’s claims line and open a claim before the move. Ask exactly which forms they need and whether they require their own nurse to assess your parent.
3. Get a statement from the doctor that describes the daily activities your parent cannot do alone, or the cognitive impairment and the need for supervision, using the policy’s own language.
4. Ask the community’s business office whether it has billed this insurer before and request a copy of its license so the insurer can confirm the setting qualifies.
5. Give the insurer the community’s care assessment and plan of care once your parent is admitted.
6. Pay the community in full during the elimination period and keep every invoice and proof of payment.
7. Submit invoices on the insurer’s schedule, usually monthly, and calendar the annual recertification so payments do not stop.

Most policies reimburse the policyholder rather than paying the community directly, so you will pay the community and get money back. Some insurers will pay the facility if you assign the benefit; ask. I go deeper on the forms and the follow up in paying for assisted living and memory care using long term care insurance.

The elimination period in practice

If the policy has a 90 day elimination period and your mother moves in on the first of the month, the family pays the full fee for roughly three months before the first reimbursement. Some policies count calendar days from the trigger date, others count only days on which paid care was delivered, and some count days of care at home from an aide before the move. The difference can be weeks of money. Read the definition, then ask the insurer in writing which one applies.

What the policy pays at a Long Island community, and what it does not

The policy pays toward the cost of care in a covered setting up to the benefit cap. In an assisted living community on Long Island, the monthly fee usually combines rent, meals, housekeeping and a base level of care, and then adds a care level charge as needs rise. Some policies reimburse the whole facility fee once the trigger is met. Others reimburse only the care portion and treat room and board as the family’s responsibility. The policy’s definitions section decides which, and it is the single most important page to read.

Memory care is normally covered when the cognitive trigger is met and the community meets the facility definition. On Long Island and in Queens there are about 47 memory care programs, 42 of them inside larger assisted living communities and 5 free standing, and the licensing of the particular building can matter to an insurer, so request the license early. My Long Island memory care guide describes how these programs are set up.

Independent living is not covered, because no care is being delivered. A short stay in a nursing home after a hospital visit is usually paid by Medicare first, and the policy may pick up where Medicare stops. A few older policies pay a lower daily benefit for assisted living than for a nursing home, which was common before assisted living became the norm. If you see two different numbers on the schedule of benefits, that is why.

What drives the premium, and how people try to lower it

I do not quote premiums, because they depend on the insurer, the year, the person’s age and health, and the design of the policy. A licensed agent can give you current numbers. What I can describe is what moves the price, because it also shapes how the policy performs later.

• Age at purchase. Younger is cheaper, and every year of waiting raises the price and the chance that a health change ends eligibility. I cover the health side in what disqualifies you from long term care insurance.
• The size of the daily or monthly benefit. A bigger benefit costs more and covers more of a real Long Island fee.
• The benefit period. Two years is cheaper than five; lifetime coverage is rare now.
• The elimination period. A longer wait lowers the premium and raises what you pay yourself at move in.
• Inflation protection. The most expensive rider and the one families are most grateful for twenty years later.
• Couples. Many insurers discount when both spouses apply, and shared care riders let one spouse draw on the other’s unused pool.

The ways people save are the mirror image: a longer elimination period, a smaller benefit with inflation protection rather than a big benefit without it, a shorter benefit period, and buying as a couple. There are also hybrid policies that combine life insurance with a long term care rider; the premium is often fixed and the money is not lost if care is never needed. I explain the trade offs in is long term care insurance worth it. One more thing: premiums on older traditional policies have risen with state approval, so do not assume the number on the original application is the number for life.

Who needs a policy, and who does not

The honest answer is that long term care insurance is not for everyone, and the people who sell it will often say the same. It fits best for a person with meaningful assets to protect, a house a spouse will keep living in, and income that can carry the premium through retirement. It fits poorly for someone whose savings are modest enough that Medicaid would arrive quickly anyway, and for someone wealthy enough to pay for several years of care without consequence.

Timing decides the rest. Policies are underwritten, which means the insurer looks at health before it says yes. Once a person needs help with daily activities or has a dementia diagnosis, a traditional policy is no longer available, and the alternatives narrow to hybrid products with their own limits, life insurance conversions, veterans benefits where they apply, savings and eventually Medicaid. I describe those paths in ways to pay for assisted living.

If you are the adult child reading this for a parent who already has a policy, your job is simpler: find it, read it, and open the claim early. If you are reading this for yourself in your fifties or sixties, talk to a licensed agent and your own financial advisor, and ask the agent to show you what the benefit would be against a current Long Island fee with and without inflation protection.

Planning 18 to 24 months past the move with a policy in hand

I plan every placement 18 to 24 months past the move so a rising level of care is anticipated rather than discovered. A policy changes that plan in a specific way: the monthly benefit stays flat while the community’s fee rises as care needs rise. A resident who starts at a base care level and moves to a higher level, or transfers from assisted living into the memory care neighborhood of the same building, will see the fee climb while the reimbursement does not. The family’s share grows, and it is better to see that on paper in month one than to be surprised in month fourteen.

So when we tour together, I ask each business office what the care levels cost today, how often they reassess, and how a transfer to memory care is priced. Then we lay the policy’s benefit against those numbers and against the benefit period. If the pool will last three years and the plan expects four, we talk about what fills the gap now, while there are still choices. That conversation is part of the free help I give families, and it is one of the reasons I ask about the policy on the first call. I have toured more than 90 communities across Nassau, Suffolk and Queens, and I know which business offices handle these claims smoothly, which is a small thing until the reimbursement is late and the bill is due.

Bring the policy to the first call

Assisted Living Locators of Long Island helps families across Nassau, Suffolk and Queens choose assisted living, memory care or independent living with the finances in full view. The help is free to families; communities compensate the advisor when a family moves in. I am not an insurance agent, a lawyer or a financial advisor, but I will read the policy with you, tell you how it will behave at a community, and build a plan that reaches 18 to 24 months past the move.

My office is at 42 Prospect Ave, Glen Cove, NY 11542. Get in touch, and have the schedule of benefits page nearby when we talk.

Questions readers ask

Read next

• Is Long Term Care Insurance Worth It for Long Island Families?
• What Disqualifies You From Long Term Care Insurance
• Does Medicare Cover Long Term Care? The Short Answer and the Exceptions