Best Long-Term Care Insurance Companies

••• Getty Images 

Studies from the U.S. Department of Health and Human Services show the majority of people over the age of 65 will require long-term medical care at some point in their lives, almost 70 percent, and 40 percent of these people will also need nursing home care. Original Medicare will cover some costs but will only cover the full cost for the first 20 days of treatment, after this only partial benefits are paid. There is no payment from Medicare after the first 100 days of treatment. For seniors on a fixed income, the gap in coverage can cause a financial hardship.

Long-term care insurance can help make up the gap in coverage by paying for things such as assisted living facility and nursing home care, hospice care and adult day care. It can also help pay for the cost of home health care and in-home skilled nursing care.

The Cost of Long-Term Care

Depending on where you live in the United States, the average annual cost of long-term health care can vary greatly, anywhere from $30,000 to up to $100,000 annually. Depending on the type of long-term health care needed, the costs could be more or less. Studies show that the cost of long-term care insurance is traditionally less in the southeast and south-central U.S. with costs increasing in the New England states, the Pacific Northwest and in the Midwestern states. Several factors play into the cost of a long-term care insurance policy including your state of health when you buy coverage, the policy’s benefit amount, the elimination period (the time you must wait for coverage to begin), the maximum daily and monthly benefit amount and any riders (endorsements) added to the policy to increase coverage such as an inflation protection rider which protects your premium from increasing with the rate of inflation.

Types of Long-Term Care Insurance Policies

Long-term care insurance is generally offered in one of two policy types:

  • Traditional: A traditional long-term care policy offers flexible insurance coverage that takes care of health care that is required over an extended period of time. One advantage of the traditional long-term care policy is that is requires a relatively small payment upfront to begin coverage. Premiums are also usually tax-deductible. One disadvantage is that the premium rate is not locked in over the life of the policy and may increase.
  • Hybrid: A hybrid policy combines a traditional long-term care insurance policy with a life insurance policy. An initial investment of $50,000 or more is needed with most insurance companies to start the policy. The investment covers long-term care payouts or payments to your beneficiaries after your death if you do not require long-term care. The premium does not increase over the life of the policy. If you’re worried about having long-term care insurance but never using it, a hybrid policy may be the way to go. However, unlike the traditional policy your insurance premium may not be tax deductible.

    Best Long-Term Care Insurance Companies

    1. Mutual of Omaha is a well-known and respected name in insurance. It is a privately-held insurance company with excellent financial strength ratings. A.M. Best rates Mutual of Omaha as “A+” Superior and it also has an “A+” rating from the Better Business Bureau. Mutual of Omaha has been providing life insurance, long-term care insurance, retirement and other financial products for more than a century and offers coverage in all 50 U.S. states. The long-term care policy from Mutual of Omaha offers inflation protection and cash benefits with elimination periods in calendar days rather than service days.

    This is significant because it means you can start receiving your benefits sooner without having to submit receipts and having to prove you received service on a particular day. Policy benefits are available in terms of two to five years. You can also use independent home care rather than having to go through an approved agency who also is more likely to have higher rates. There is a cash alternative payout which allows you to receive up to 40 percent of your policy’s maximum monthly benefit if you don’t have any healthcare expenses or only a few expenses during any given month you are receiving benefits.

    There is a zero waiting day period for home health benefits.

    2. Transamerica is another solid choice for long-term care insurance. It has an A.M. Best “A+” Superior rating and has been in business since 1928. Transamerica is also rated “A+” with the Better Business Bureau. The cash alternative caps at 30 percent and although that is less than the 40 percent cap with Mutual of Omaha, it is still a good amount compared to other insurers. Total benefit amounts begin at a lower amount, as small as $18,000 which makes it a more affordable option. There is also a zero day waiting period for home health benefits.

    However, home health care services must be provided from an agency rather than an independent care giver.

    3. MassMutual was founded in 1851 and has consistently had superior financial strength ratings. It is rated “A++” Superior by A.M. Best and has an “A+” rating with the Better Business Bureau. A traditional long-term care policy is offered with up to a 6-year maximum benefit period, more than many other providers and offers an inflation protection rider. Some plans offer policy premiums that are tax deductible. Claims are paid based on a reimbursement model, meaning you must keep all receipts for any out-of-pocket expenses.

    Your benefits are tax-free through MassMutual and the premiums are also tax deductible. You can choose a daily benefit option of $50-$400.

    4​. AXA has been in business since 1859 and has an “A+” Excellent rating with A.M. Best and an “A+” rating with the Better Business Bureau. AXA’s long-term care policy is a hybrid policy combining life insurance and long-term care insurance. Anyone ages 20-75 can purchase a long-term care policy through AXA. Payments are made in monthly benefit payments rather than by reimbursement. The elimination period is 90 days. Certification of disability is required for payment of claims. You can choose monthly benefits of 1 percent, 2 percent or 3 percent.

    Some policy premiums are tax deductible. The hybrid policy from AXA is a good choice if you want a product that can double as long-term care insurance if you need it and potential supplemental retirement income if you don’t.