International Long Term Care Insurance

The Importance of Long-Term Care Planning

Why LTC Matters

Aging is a natural part of life, but with it comes an increased likelihood of health challenges that demand planning and preparation. Dementia, strokes, chronic illnesses, and mobility limitations are just a few of the conditions that can significantly impact an individual’s ability to live independently. According to the Alzheimer’s Association, one in three seniors dies with Alzheimer’s or another form of dementia, underscoring the critical need for proactive care solutions.

Without long-term care (LTC) insurance, the financial burden of managing these conditions can be staggering. In the United States, the cost of long-term care ranges from $30,000 to $100,000 per person annually, depending on the level and type of care required. These figures can rise sharply for memory care or round-the-clock assistance, leaving many families grappling with impossible choices: depleting savings, compromising the quality of care, or becoming caregivers themselves.

Beyond the financial strain, the emotional and logistical toll on families is profound. Unpaid family caregivers, often adult children, face burnout, strained relationships, and even career disruptions while juggling care responsibilities. With proper LTC planning, individuals can alleviate this burden, preserving family relationships and ensuring access to the care they need.

Odds of Needing LTC

Despite the common perception that serious health issues may not happen to us, the statistics tell a different story. Research shows that nearly 70% of people over 65 will require some form of long-term care during their lifetime. For women, the odds are even higher, as they tend to live longer than men and are therefore more likely to face extended periods of care.

Securing LTC insurance early is crucial, but the barriers are significant. Coverage eligibility often depends on health and age at the time of application. Most policies are unavailable to individuals over 74, and nearly 25% of applicants aged 60-69 are denied coverage due to preexisting conditions. For those aged 70-74, the rejection rate climbs to 44%.

Additionally, the cost of premiums increases with age. A policy purchased in one’s 50s might be relatively affordable, but waiting until one’s late 60s or 70s can make LTC insurance prohibitively expensive. The younger and healthier you are when you apply, the greater your chances of obtaining affordable coverage that meets your needs.

Planning for long-term care isn’t just a financial decision; it’s an act of self-preservation and consideration for those we love. With the right strategy, retirees can secure the care they need while protecting their families from emotional and financial strain.

Retiring Abroad and LTC Insurance

The Appeal of International Retirement

The dream of retiring abroad has captured the hearts of many Americans. With its promise of a lower cost of living, favorable climates, and access to rich cultural experiences, international retirement can feel like a second act full of adventure and ease. Countries like Mexico, Portugal, Costa Rica, and Thailand have emerged as popular retirement destinations, offering quality healthcare at a fraction of U.S. costs.

Financially, the savings are substantial. Housing, food, and healthcare costs in many of these locations can be 30-70% lower than in the United States, enabling retirees to stretch their Social Security and savings further. It’s no surprise, then, that the number of retirees collecting Social Security abroad has risen by over 50% in recent decades. This trend shows no signs of slowing, as more people seek to make their retirement dollars go farther while enjoying the perks of life in a new culture.

But even as retirees embrace the allure of international living, it’s critical to acknowledge the unique challenges that come with such a move—particularly when it comes to planning for long-term care.

Challenges with International LTC Insurance

While the thought of retiring abroad is enticing, long-term care planning can quickly become a sticking point. Many U.S.-based long-term care insurance (LTC) policies offer limited or no coverage outside the country, leaving expats at risk of significant financial exposure if they require care in their new home.

Private LTC insurance is a uniquely American phenomenon, as most other countries integrate long-term care benefits into their universal healthcare systems. This discrepancy creates logistical challenges for U.S. insurers when trying to extend coverage internationally. A lack of provider networks abroad makes it difficult for insurers to validate claims or reimburse care expenses, limiting their ability to offer robust benefits outside the U.S.

Fraud concerns compound the issue. Insurers typically require care to be provided by licensed professionals, a system designed to prevent fraudulent claims. However, in many popular retirement destinations, regulatory standards for caregiving may differ from those in the United States, creating additional barriers to securing international coverage.

For retirees planning to live abroad, these challenges underscore the importance of carefully reviewing LTC policies, understanding their limitations, and exploring alternative strategies to ensure access to quality care if the need arises. Retirement may take you far from home, but the peace of mind that comes with proper planning is universal.

Understanding Your Policy

Steps to Assess Coverage

When planning for long-term care abroad, the first step is to thoroughly understand your existing LTC insurance policy. Many retirees assume their coverage will seamlessly extend overseas, only to discover critical limitations when they need care. A careful review of your policy’s terms can help you avoid unpleasant surprises.

Start by focusing on two key sections:

• “Exclusions and Limitations”: This section, often located near the back of the policy, outlines the situations and locations where benefits are restricted or unavailable. It may specify whether care provided outside the United States is excluded entirely or limited to specific circumstances.
• “International Benefits”: If your policy includes international coverage, this section will detail the extent of the benefits. Some policies may allow partial reimbursement abroad, while others may impose time caps or geographic restrictions, such as only covering care in Canada, the U.K., or specific regions.

Common limitations to look for include:

• Reduced benefits: Some policies reimburse only a percentage of the usual benefit amount for care provided internationally.
• Time caps: Benefits may be limited to a specific duration, such as one year of coverage abroad.
• Geographical restrictions: Coverage may be limited to countries with robust healthcare systems or those with ties to U.S. insurers.

By understanding these provisions, you can better assess whether your current policy meets your needs or if adjustments are necessary.

Typical Provisions for International Coverage

For policies that do extend benefits internationally, specific requirements and limitations often apply. These provisions typically include:

• Eligibility Criteria: You must meet all the conditions for coverage, such as being deemed chronically ill and having a physician-approved plan of care.
• Proof of Illness: Insurers generally require medical documentation from licensed providers to validate the need for long-term care.
• Elimination Period: Many policies include a waiting period during which no benefits are paid, even if you qualify for care. This period may differ for international claims.
• Licensed Providers: To ensure the quality of care and prevent fraud, coverage is often limited to services provided by certified professionals. Hiring informal caregivers, such as family members or neighbors, is unlikely to be reimbursed.

When benefits are provided abroad, they typically fall into one of three tiers:

1. Full benefits: Rare policies offer 100% of the daily or monthly benefit amount anywhere in the world.
2. Partial benefits: More common, these policies reimburse a reduced percentage—often 50%—of the standard benefit amount.
3. No benefits: Some policies exclude coverage outside the U.S., its territories, and select countries entirely.

Understanding these provisions is essential for evaluating whether your policy aligns with your plans to retire abroad. If it falls short, you may need to consider alternatives, such as purchasing a supplemental policy or saving for out-of-pocket expenses.

In retirement, the assurance of having a plan for care—no matter where you are—is invaluable. By taking the time to review your policy now, you can avoid uncertainty later.

Insurance Companies Offering International LTC Options

When planning for long-term care (LTC) abroad, choosing the right insurance provider can make all the difference. While most U.S.-based LTC insurance policies restrict coverage outside the country, a handful of companies have policies with international options. Here’s an overview of some providers that extend benefits to expats:

Companies with International LTC Coverage

Genworth Financial:

• Genworth offers international coverage that reimburses up to 50% of the daily or monthly benefit for a maximum of 365 days. If home care is required, coverage is further capped at 25% of the policy’s benefit amount. This flexibility makes Genworth a viable option for expats, though it’s important to note the time limitations and reduced benefit amounts.

John Hancock:

• John Hancock’s Performance LTC policy provides coverage abroad for up to one year. However, certain benefits, such as hospice care and care advisory services, are excluded. Additionally, the policy does not cover services in countries subject to U.S. sanctions, which may limit options for retirees in some regions.

Mutual of Omaha:

• Mutual of Omaha’s LTC policies cover care outside the U.S., Canada, and the U.K., with benefits capped at 12 months, equivalent to 12 times the monthly maximum. This structure provides some flexibility but still requires careful consideration for expats planning for long-term stays abroad.

Transamerica:

• Transamerica offers limited international LTC coverage in the form of cash benefits. Policyholders are reimbursed at one-third of the monthly benefit amount for qualifying care expenses abroad. While this level of coverage is not comprehensive, it can still provide a financial cushion for retirees seeking care in affordable healthcare markets.

Key Takeaways

International LTC coverage varies widely between providers, and no single policy will fit every retiree’s needs. Some key points to consider when evaluating policies include:

• Coverage Limitations: Many policies cap benefits at reduced rates or restrict coverage to a limited duration, typically one year or less.
• Regional Variations: Some insurers cover care in specific regions, such as Canada or the U.K., but exclude other countries entirely.
• Exclusions: Certain benefits, such as home care or hospice, may not be covered abroad.

Given the complexities, consulting with an LTC insurance specialist is highly recommended. A specialist can help retirees identify policies that align with their international retirement plans while ensuring there are no gaps in coverage.

Choosing the right policy isn’t just about securing care—it’s about gaining peace of mind. By comparing options carefully and understanding each policy’s limitations, expats can enjoy their retirement abroad knowing they’re prepared for whatever challenges may arise.

Exploring Your Options

Policies That Support International Coverage

Long-term care (LTC) insurance policies that support international coverage are far from standardized. Coverage can vary widely in terms of payment amounts, durations, and geographical restrictions. Here’s a breakdown of how policies rank, from the most comprehensive to the most limited:

Full International Coverage:

• The best policies offer 100% of the daily or monthly benefit amount for care provided anywhere in the world. These are rare and typically come with higher premiums.

Partial Coverage:

• Many policies reimburse a percentage of the benefit amount abroad—commonly 50%. For instance, home care might be capped at 25%, and coverage is often limited to a maximum of 12 months.

Geographically Limited Coverage:

• Some policies restrict coverage to specific regions, such as Canada, the U.K., or U.S. territories, excluding benefits elsewhere. These policies may be more affordable but are less flexible for retirees exploring destinations like Mexico or Southeast Asia.

No Coverage Abroad:

• The most restrictive policies provide no benefits outside the U.S., its territories, and a select few sanctioned countries. These plans require retirees to return to the U.S. for care.

Understanding which tier your policy falls into is crucial, especially when considering retirement in a specific country.

Planning Ahead

Proactive planning is essential when selecting a policy with international coverage. Here are two key factors to keep in mind:

Purchase While Still a U.S. Resident:

• Most LTC insurers require applicants to have a legal U.S. residence when purchasing a policy. If you’re already living abroad, your options for securing international coverage may be severely limited—or nonexistent.

Maintaining Continuity in Coverage:

• If you decide to switch policies, ensure there are no gaps in your coverage. Keep your existing policy active until your new policy is approved, your premium is paid, and all terms are finalized. Interruptions in coverage could leave you vulnerable if care is needed during the transition period.

By planning ahead, you can secure a policy that aligns with your long-term retirement goals and ensures uninterrupted care.

Alternative Strategies

For those who find LTC insurance options inadequate or unaffordable, there are alternative strategies to consider:

Paying Out of Pocket:

• In many countries, the cost of healthcare and long-term care is significantly lower than in the U.S. For example, assisted living facilities in Mexico or Thailand may cost one-third to one-half of their U.S. equivalents. Building a savings plan to cover these costs out of pocket can be a viable solution for financially stable retirees.

Exploring Local Insurance Options:

• Some countries offer private health or long-term care insurance tailored to their local markets. While these plans may not cover all aspects of care, they can supplement existing savings and reduce out-of-pocket expenses. Be sure to research the reliability and reputation of local insurers before committing.

By exploring all available options—whether through international LTC policies or alternative strategies—you can design a care plan that provides both financial security and peace of mind, ensuring your retirement abroad is as worry-free as it is fulfilling.

Practical Advice for Expats

Shop Smart

Finding the right long-term care (LTC) insurance as an expat requires strategic planning and expert advice. Not all policies are designed with international retirees in mind, so working with LTC specialists who understand expat needs is crucial.

When evaluating a policy, consider asking the following key questions:

What level of international coverage does the policy provide?

• Determine whether the policy offers full benefits, partial benefits, or no benefits for care abroad.

Are there geographical restrictions?

• Ask if the policy limits coverage to specific countries or regions, such as Canada or the U.K., and excludes others.

What are the conditions for reimbursement?

• Understand the documentation required for claims, including proof of illness and licensed providers.

How long does international coverage last?

• Some policies cap coverage abroad at one year or less. Ensure the duration aligns with your retirement plans.

What are the premiums and benefits?

• Compare costs relative to the benefits offered, considering any additional expenses you might incur abroad.

Shopping smart ensures you select a policy tailored to your needs, minimizing future complications and maximizing your coverage.

Managing Existing Policies

If you already have LTC insurance, it’s essential to approach any changes with caution. Dropping your current policy prematurely can leave you vulnerable, especially if a replacement policy is not yet finalized or your health status changes in the interim.

Instead, maintain your existing coverage until:

• You have thoroughly reviewed and secured a new policy.
• The new policy is active, and premiums are being paid.

Additionally, consider whether you might return to the U.S. for care in certain situations. While living abroad, maintaining a U.S.-based policy can provide flexibility if care options abroad are insufficient or unavailable.

When to Forego LTC Insurance

For some expats, long-term care insurance may not be necessary or practical. Situations where dropping LTC insurance might make sense include:

Financial Independence:

• If you have sufficient savings or assets to self-fund your care, you may not need insurance. This strategy can be particularly effective in countries with lower healthcare costs.

Reliance on Local Healthcare Systems:

• Some countries offer affordable and high-quality long-term care services through their public or private healthcare systems. In such cases, LTC insurance may not provide significant added value.

Limited Coverage Options:

• If your policy excludes coverage in your chosen retirement destination or imposes prohibitive restrictions, the benefits may not justify the premiums.

Deciding to forgo LTC insurance is a deeply personal choice that requires a thorough understanding of your financial situation, health risks, and the care options available in your retirement location.

By shopping smart, managing existing policies carefully, and considering when LTC insurance is or isn’t necessary, expats can make informed decisions that align with their unique needs and circumstances. Proactive planning ensures that the golden years abroad are spent enjoying life, not worrying about unexpected challenges.

Conclusion

Proactive Planning for Peace of Mind

Retiring abroad offers the opportunity to live out your golden years in a setting that feels like a dream come true—vibrant sunsets, rich cultural experiences, and a lifestyle tailored to your preferences. But dreams need a foundation, and proactive planning for long-term care (LTC) is an essential part of building that foundation. Addressing the complexities of LTC insurance ensures that you are prepared for whatever challenges the future may bring, providing both financial security and emotional peace of mind.

Call to Action

If you’re considering or already living the expat lifestyle, now is the time to act. Review your current LTC policy to understand its international coverage, consult with insurance specialists to explore tailored options, and factor long-term care into your broader financial and retirement planning. Don’t leave your future to chance—make informed decisions that protect your well-being and your loved ones.

A Final Inspirational Note

Retirement abroad is more than just a change of scenery—it’s a chance to embrace a fulfilling and adventurous chapter of life. Thoughtful preparation, particularly for long-term care, ensures you can fully enjoy this time without the worry of unexpected hurdles. With the right plan in place, you can live your dream retirement knowing that you’ve safeguarded your future.