Short Term Care

Short Term Care insurance is an alternative option to hybrid or traditional long-term care.

Benefits

With traditional Short-Term Care, you choose your benefits when you apply. This includes:

• Daily Benefit
• Benefit Period
• Inflation Protection
• Waiting Period

Daily Benefit

This is how much the policy will pay each day that you need coverage.  The amounts usually range from $100/day up to $400/day. You may have noticed this is a daily benefit and most long term care plans are a monthly benefit.  To compare them you would need to multiple the daily benefit for the number of days in a month. So $400/day X 30 days = $12,000 of coverage that month

Benefit Period

This is how long the coverage lasts.  The definition of Short-Term Care is less than 1 year. You have different options you can choose from, but the maximum is normally 360 days.

Inflation Protection

Inflation protection increases your monthly benefit over time.  Inflation protection is not required.  If you decide to add it, then it increases your monthly benefit each year you have the policy. Common options are between 3% and 5% benefit increases every year.

Waiting Period

Most policies have a waiting period before your coverage starts.  The longer the waiting period the lower the premiums.  Many people with Short-Term Care plans choose a waiting period between 20 and 100 days.  But there’s some policies that have no waiting period at all.

Premiums

The first 2 points about premiums are:

• They are lower than Traditional Long-Term Care and Hybrid policies
• They are not guaranteed to stay the same for life

The first point is pretty straight forward because these policies don’t offer coverage for as long as long-term care.  But most people don’t need coverage for that long.  So this amount of coverage better suits their needs and budget. After you are approved, your coverage is guaranteed renewable.  This means the insurance company cannot cancel you as long as you pay your premium. It’s important to note that your premium is NOT guaranteed. Many of these policies are based on the age you currently are and not the age you were when you buy the policy. For example, you buy the policy at age 65 but it goes up a little bit in premium when you turn 66 because you are now older. Also, the insurance company can file a rate increase with the state if needed.  So your premium can change over time. But as long as you continue to pay your premium, your coverage will stay active.

Application Process

This has the easiest application process between traditional, hybrid, and short term care insurance. It’s also the fastest to get an official response back from the insurance company. The application process starts with me.  Together we review your health history and current financial situation.  Then we review suitable options for you. Each insurance company has different requirements depending on your situation.  Some will want to do a phone interview.  That interview takes less than an hour. That gives them enough information to make a decision about your application. Others will be able to make a decision based on the information on the application.

Quote example

Here’s a few examples for people that are 65 years old looking for short-term care solutions.

Example 1 – 65-year-old single woman

One Short-Term coverage option would be:

• $200/daily benefit ($6,000 monthly benefit) for Facility Care
• Maximum benefit period of 360 days for Facility Care
• 20 day waiting period before coverage starts
• $1,200 weekly benefit for Home Care
• Maximum benefit period of 52 weeks for Home Care
• The premium for this coverage is $1,770 per year.

This policy will pay out up to $200/day for 360 days for facility care. And it will pay $1,200/week for 52 weeks for Home Care. That’s a total potential benefit of $134,400. If you pass away without needing care, then the policy would end. No money is refunded or paid out by the policy.

Example 2 – 65-year-old single man

One Short-Term coverage option would be:

• $200/daily benefit ($6,000 monthly benefit) for Facility Care
• Maximum benefit period of 360 days for Facility Care
• 20 day waiting period before coverage starts
• $1,200 weekly benefit for Home Care
• Maximum benefit period of 52 weeks for Home Care
• The premium for this coverage is $1,770 per year.

This policy will pay out up to $200/day for 360 days for facility care. And it will pay $1,200/week for 52 weeks for Home Care. That’s a total potential benefit of $134,400. If you pass away without needing care, then the policy would end. No money is refunded or paid out by the policy.

Example 3 – 65-year-old married couple

This isn’t a family policy or discount for both being on a plan.  So they each would have their own policy and each would have:

• $200/daily benefit ($6,000 monthly benefit) for Facility Care
• Maximum benefit period of 360 days for Facility Care
• 20 day waiting period before coverage starts
• $1,200 weekly benefit for Home Care
• Maximum benefit period of 52 weeks for Home Care
• The premium for this coverage is $1,770 per year.

This policy will pay out up to $200/day for 360 days for facility care. And it will pay $1,200/week for 52 weeks for Home Care. That’s a total potential benefit of $134,400. If you pass away without needing care, then the policy would end. No money is refunded or paid out by the policy.

Benefit Example

This policy can be used many ways but here’s 3 specific examples.  Let’s stay with the same benefit from the quote example.

Home Health Aide

A person is no longer able to live at home independently.  This type of policy could pay for a Home Health Aide to come to your house.  So that you can stay home. It’s common for home health aides to be there to help for 40 hours per week.  The national average cost for a full-time home health aid is $6,292/month. The Short-Term Care policy will pay $1,200/week for each week that Home Health Aide comes on at least 3 different days. So for a 4 week month, this policy would be $4,800.

Assisted Living Facility

I had a client have a stroke at 67 years old.  Very healthy and it came out of nowhere.  She’s capable but no long able to live independently. Assisted living is about $5,300/month. This is an indemnity policy, so it pays you and you choose what to do with the cash. The Short-Term Care policy will pay you a daily benefit of $200/day. For a 30-day month, it would pay you $6,000 that you can use to pay for that care.

Nursing Home

If it’s a situation where you need around the clock care, then a nursing home is the typical location for care. The national average for a nursing home is $8,669/month. The Short-Term Care policy will pay you a daily benefit of $200/day.  For a 30-day month, it would pay you $6,000 that you can use to pay for that care.

Why do people choose this plan?

Lower premiums

These premiums are lower than both traditional and hybrid type long-term care policies.  If those are out of your budget, these may better suit your budget.  And they can be an excellent value for a lot of people.

Lenient Underwriting

Some people cannot pass a health review for traditional long-term care insurance.  But these policies tend to be more flexible on who they accept.  So you may be able to qualify for this plan even though you are not eligible for a traditional plan

Faster/Easier Underwriting

Some people don’t want to have to do a physical exam to get coverage.  Other people want to have an answer right away instead of waiting a month to get an official decision. These plans solve both of those problems for people. No physical exams and you usually get an answer within a few business days.

What’s next?

There are several companies that offer this type of coverage. If you’d like to explore your options, give me a call at 608-571-4461, or click the link below to schedule time for us to talk.