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How to Pay for Long-Term Care When You Are Not in Perfect Health

What to do if you think you can't qualify for long-term care insurance

spinner image A caregiver holding a piece of paper helping a woman review her options for paying for long term care
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A popular bit of advice is to purchase long-term care insurance in your 40s or 50s because you can get it when it is most affordable — and before you find yourself with health conditions that could leave you uninsurable. But what happens when you are diagnosed with an unexpected illness or become chronically ill at an early age — before you've had a chance to buy long-term care insurance?

That's what happened to Mark Charnet, 59, founder of American Prosperity Group in Pompton Plains, New Jersey. “I was diagnosed as diabetic when I was 30,” he says. He also has experienced a quintuple bypass and suffered multiple strokes. “I knew that I would never be able to [qualify for] long-term care insurance,” he says.

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The costs of paying for long-term health needs can be enough to break anyone's budget. In fact, the median cost of staying in a semiprivate room at a skilled nursing facility is $93,075 a year, according to insurance provider Genworth Financial. Having a home health aide assist with activities of daily living (ADLs) such as bathing, dressing or eating has a median price tag of $54,912 per year.

Assessing the risk

As with all insurers, long-term care insurance providers evaluate risk when issuing a policy. If you have a high risk of needing long-term care services, you are less likely to qualify.

But having a health challenge in your past isn't an automatic disqualifier — particularly if you have recovered from it, says Chris Orestis, president of Retirement Genius, a company that provides financial advice to seniors. “They're going to look at your past but they're really going to factor in your current health and your current condition,” Orestis says.

For example, the American Association for Long-Term Care Insurance (AALTCI), a professional organization for insurance providers, says you may be able to get a long-term care policy after a past cancer diagnosis depending on the type of cancer and what stage it was or if you have remained cancer-free for a period of time. Likewise, you may qualify for coverage after a stroke if the stroke was more than two years ago and you don't have other medical conditions.

However, shopping for a policy requires care. For one thing, getting declined by one long-term care provider can lessen your chances of getting approved by others, warns Jesse Slome, executive director of AALTCI. Some insurers ask whether you've been declined and, if so, “that can result in an automatic decline,” Slome says. The AALTCI can connect you with a specialist who can give you an idea of whether you are likely to qualify before you fill out an application.

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If you are asked, don't attempt to lie or gloss over your health history. If you are found to be untruthful, or if you fail to disclose your current or past health circumstances, a future claim could be denied, Orestis says.

If you are still able to qualify for long-term care insurance, you will likely pay more for it. The average annual premium for a 65-year-old man in good health is $1,400, while a 65-year-old man with some health issues might pay, on average, $2,100 per year, according to AALTCI.

Alternative solutions

But health conditions may force some, like Charnet, to consider other ways to finance their long-term care needs. Here are some possible solutions.

1. Fund it yourself. Once he knew long-term care insurance wasn't an option, Charnet embraced a simple philosophy: “Live on less so you can save and invest more,” he says. He suggests setting aside money weekly to invest, whether in a 401(k), an IRA or a non-retirement investment account.

2. Get long-term care insurance through a group plan. If you take a job that offers long-term care coverage as a benefit, you can be enrolled regardless of your health history. “If somebody has some kind of chronic condition, and their employer offers long-term care insurance, they really should enroll in it because then they may have the opportunity to carry it forward with them when they leave the company,” Orestis says.

3. Invest in a long-term care annuity. With an annuity, you pay a lump sum of money, and in return you get a specified amount of income paid to you at set intervals for the rest of your life. Long-term care annuities offer special provisions to help pay for long-term care expenses.

4. Consider a hybrid life insurance/long-term care policy. While long-term care insurance providers are interested in your likelihood of needing assistance with daily living, life insurers are focused on whether you are likely to die at an early age. It may be easier for some people with chronic conditions to qualify for life insurance, and if so, some policies come with a long-term care rider.

5. Buy a policy for short-term care. Unlike long-term care policies that can provide years of coverage, short-term care policies typically will cover you for a year or less. “The benefits are not as rich as a traditional long-term care insurance product, but it's still better than nothing,” Slome says.

6. Gain access to long-term care services through Medicaid. The federal government will pick up the tab for long-term care services, but only if you have limited income and your countable assets are typically less than $2,000 as an individual or less than $3,000 per couple.

7. Sell your life insurance policy. If you already own a life insurance policy, you can do what's called a long-term care life settlement, Orestis says. In such a transaction, the proceeds from the sale are used to fund long-term care expenses.

Tamara E. Holmes is a Washington, DC-based writer and editor. She has written extensively about money, entrepreneurship and careers for more than two decades. Her work has appeared in such publications as USA Today, Working Mother and Essence.

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