Long-term care vs. cancer insurance: How do these plans differ?

Dear Toni: I applied for a long-term care policy but was denied due to having a pacemaker installed in January. The agent who presented the LTC plan suggested that I apply for cancer insurance to help with out-of-pocket cost in case I have cancer issues.

I had not applied for long-term care because I do not turn 65 until October. Now I am discovering that waiting until I was older was not a good idea. Can you please explain the difference between cancer insurance and a long-term care insurance plan? — Leonard, Tampa, Forida

Dear Leonard: I am noticing an increase in issues with long-term care because many are waiting long past 65 to apply for a traditional long-term care policy. By then, the premium is unaffordable for their retirement budget, or they cannot qualify because of health issues.

It is important to begin searching for long-term care insurance as you turn 50, so that the premiums are more affordable, and the plan can grow with a compounded lifetime inflation factor of at least 3 percent.

The cost of nursing home care is projected to rise drastically, from an average yearly cost of $115,000 in 2023 to more than $207,000 in 20 years. The average cost of assisted living is approximately $57,000 per year and is projected to rise in 20 years to about $103,000 per year. Most of us want to stay home, and the cost of home care is around $30 per hour today. I cannot imagine what that cost will be in the future.

There is a major difference between a long-term care plan and cancer insurance. The insurance industry has designed different types of products for Americans who are concerned about long-term care and want to find a plan that is affordable or for which they can be approved by underwriting.

Let me explain the various long-term care plan options and what a cancer insurance plan is.

Long-term care options

Traditional long-term care policy: The younger you are, the lower the premiums will be. Look for a long-term care policy while you are younger and in good health. A long-term care plan is coverage for nursing home care, assisted living or care at home after a 30-, 60- or 90-day (or longer) deductible has been met. A long-term care policy is the top of the line for long-term care planning.

Life and annuity policies: Many life/annuity insurance policies have a provision, or rider, for long-term care. These plans may not meet your future needs like a traditional long-term care policy would.

Veteran benefits for long-term care, “aid and attendance” benefits: There are billions of Veterans Affairs pension dollars available for long-term care for veterans who apply for their benefits. You must have a need for long-term care to qualify.

Medicaid: Those with too much in income and assets may not qualify for their state’s long-term care benefits through Medicaid.

Cancer insurance plan: A cancer plan will pay a lump sum when a person is diagnosed with cancer. For example, for a specific monthly premium, a plan pays a set amount of $30,000. While a cancer plan is less expensive than a long-term care policy, it does not offer the benefits of a long-term care plan.

Toni King is an author and columnist on Medicare and health insurance issues. If you have a Medicare question, email info@tonisays.com or call 832-519-8664.