What Does Nursing Home Insurance Cover and How Much Does It Cost?

Family going over options to find Nursing Home Insurance
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When planning ahead for yourself or a loved one, be aware of the two kinds of insurance that apply to nursing homes. One covers your personal belongings and liability when you live in a nursing home. The other helps you cover the costs of living in a nursing home, should you ever need to. Here are the ins and outs of both.

Insuring Personal Belongings in a Nursing Home

When living in a nursing home, several factors come into play to determine if you or your family member needs to buy special insurance to cover contents and personal belongings

Check if the home insurance of children will cover parents' contents while in the nursing home. Some insurance companies will consider the children responsible after a parent enters the nursing home.

Very often, there is coverage for "parents in a nursing home" in the policy wording of family member's home insurance. If the policy does not provide enough, the children may have more negotiating power to obtain favorable rates by asking if an endorsement can be added for contents of the parent in the nursing home. Also ask about liability coverage, because this is most likely a separate option.

Speaking to the insurance broker or agent to understand the options or included coverages and conditions on your home policy is important, because just looking at the declaration page of the policy will not usually include these details. The information varies by each insurance company and is worth the call.

Always explore the option of including parents in your policy as there may be coverage for you already in place, and you may not need to spend more money. Nursing home costs are expensive, so saving money where you can becomes important.

Whether the nursing home is assisted living or independent living with people having access to the dwelling or not may factor into whether an insurance company or underwriter would be willing to take on the risk of adding this to an existing policy. This factor will also guide what kind of policy a person may need in the nursing home or assisted living residence.

The value of the contents and the type of contents will also impact what kind of insurance you need. Some people just need coverage for standard personal belongings, others may be looking to specifically insure high-value items like jewelry and watches or furs.

Where to Buy Insurance for Contents in a Nursing Home

Contents insurance can be purchased through a personal lines insurance broker, agent, direct from an insurance company, or online. Start by speaking to the company that insures your home. They may be able to offer you a new policy for nursing home coverage with reduced contents amounts or specialized coverage.

You can also ask your children if their home insurance policy would cover you while in a nursing home.

Consider calling an insurance broker to help you find good insurance in the nursing home. An insurance broker will deal with more than one insurance company.

.Just as using a broker for finding affordable health insurance can help save you time and money when looking for specialized coverages like nursing home contents insurance, a broker or ​independent agent will have access to more resources than a captive agent.

Getting Liability Insurance in a Nursing Home

If you move into a nursing home, you may be asked to purchase liability insurance in the same way tenants are asked to purchase renters insurance, or condo owners may be required to carry liability insurance. The reason is that as a resident in the nursing home you may become liable for damages caused by your activity there. If you purchase insurance for your contents in the nursing home, ask the same insurer about the liability coverage. It may be included.

Nursing Home or Long-Term Care Insurance

Nursing home insurance is a type of supplemental health care insurance or long-term care insurance. Instead of focusing only on assisted living costs, discuss the options with your financial adviser. They can tailor a policy to make sure you choose the maximum benefits to cover the cost of living in a private nursing home.

Tips to Save Money

There are several options available when you review the type of policy you will purchase for nursing home expenses. Here are some basic tips to save money:

  1. Don't put off buying insurance until you are afraid you need it. Remember that just like life insurance, the younger you buy this kind of policy the more money you will save.
  2. If you are married or have a domestic partner, you may benefit from considering a shared policy.
  3. Look into the option of private vs. semi-private care and compare the costs. 
  4. Consider how long the elimination period is and get quotes with longer elimination periods. 
  5. Carefully review the coverage options, benefit period, maximum limits payable, and types of coverage offered. Choosing more or fewer options will impact your cost. Some policies also offer discounts depending on the payment method you choose. Ask if taking an annual plan will save you money. 

Will Medicare or Medicaid Pay?

Although Medicare or Medicaid may cover a portion of the costs for living in a nursing home under certain specific conditions, it will not cover all the costs. Living in a nursing home can be very expensive. Genworth has developed an online tool that helps give an idea of the costs of assisted living.

How Much Does Nursing Home Insurance Cost?

The most recent study by the Association for Long-Term Care Insurance shows the price of long-term care insurance for a couple, both aged 55, ranges from $3,000 to $6,300 for virtually the same coverage.

How Much Money Will a Nursing Home Policy Pay You?

When you discuss the options for nursing home insurance coverage with a financial adviser they should provide you with several coverage options. Depending on your personal situation—which will include an assessment of your current health, your age at the time you purchase nursing home coverage, and the level of coverage you choose—a policy could pay between $100 to $500 a day on average.

The amount a policy will pay will be clearly outlined at the time you purchase your policy, so be sure to ask if the limit for daily cost is not clear to you.

How Long Will Costs Be Covered for a Nursing Home?

Costs for nursing homes are not covered for unlimited amounts of time. Just as there will be a daily limit on how much they will pay you when you're in a nursing home listed within the policy, there will also be specific time limits mentioned as well. This time limit would be referred to as the benefit period. 

When Does the Policy Start Paying?

Nursing home insurance may have an elimination period. This is like the waiting period in various health insurance policies before coverage kicks in.

If you take a policy with a shorter elimination period, or none, then it will cost more. If you decide to take a longer elimination period, you are essentially agreeing to cover the costs yourself for a longer period before your policy starts to pay.

This ability to self-insure for the longer elimination period will help you save on annual premiums, even though it will cost you more at the time of a claim. Discuss these options with your financial adviser to understand what the best option will be for your situation. You do not want to take a longer elimination period only to find you can't afford the costs at a critical time.

When Should a Person Buy Nursing Home Insurance?

The longer you wait to buy nursing home insurance, the more expensive it will be. The cost is based on your age and health. You may also risk not being able to purchase the insurance if your health deteriorates as you get older.

If you are considering purchasing this coverage, doing so no later than your 50s will ensure the best chance of a good rate.

There's a 14% chance of being turned down for a policy in your 50s, and that number increases to 25% in your 60s.

What Happens If You Never Use It?

If you benefit from good health and never use your nursing home insurance, some policies offer these options:

  1. The option to cash out. When you purchase a policy ask about whether you will have a cash-out option.
  2. Receive dividends. Some health insurance policies may also offer the opportunity to receive dividends, a similar concept to life insurance policies with values.
  3. Take a death benefit. A beneficiary may be able to cash out if you never use the coverage. 

Article Sources

  1. Insurance Information Institute. "What Is Long-Term Care?" Accessed March 5, 2020.

  2. American Association for Long-Term Care Insurance. "2020 Long-Term Care Price Index Released for Age 55." Accessed March 6, 2020.

  3. American Association for Long-Term Care Insurance. "What's the Best Age to Buy Long-Term Care Insurance?" Accessed March 6, 2020.