International Long Term Care Insurance

Why Have Long Term Care Insurance?

Your options depend on your health, your age (almost all options for this sort insurance requires you to be under the age of 74), and your financial goals. If you want to obtain this type of insurance then you must be healthy enough to qualify and be able to afford it.

If you are not going to insure and you plan to pay for care out of pocket then you will need $30,000-$100,000 or more per person per year to cover the cost of care. And the level of care you get in the US at that low end is not something your want for yourself or a loved one. The cost of care depends on the type of care needed and where the care is provided.

Care in the US often makes distinctions between independent and assisted living, and they make further distinctions for memory care and hospice. These distinctions typically affect the cost, but additionally, you will have to move to a different facility (losing familiarity and friends).

What Are The odds?

Your future will happen whether you plan for it or not. If your health changes while you are deciding what to do you may not be able to change or acquire insurance. Of those applying for insurance ages 60-69 25% are declined coverage because of health, 44% ages 70-74 are declined. The younger you are when you buy insurance the cheaper it is and more likely you will health-qualify.

According to the Alzheimer’s Association, 1 in 3 will die from Alzheimer’s or another form of dementia. Someone in the United States develops Alzheimer’s every 65 seconds. By 2050 this is projected to be every 33 seconds. Do you really think you are going to beat the odds? If it’s not Alzheimer’s, it can be any number of other debilitating health problems (e.g., stroke, Parkinson’s, MS and so on).

If you think that you will not need long term care when you are old and frail then consider that you will need a very large sum of money set aside for this sort of care, or that you will become a substantial burden for your children.

Why International?

Many baby boomers dream of retiring abroad where the cost of living is lower and the lifestyle is desirable. In fact, the number of Social Security recipients already living that retirement dream outside the US increased 50 percent from 2003 to 2013, and shows little sign of slowing.

But if you decide to retire abroad, will your LTC insurance leave the country with you? It’s no problem taking your LTC policy; once you buy the policy, it remains in effect as long as you pay the premiums. The million dollar question is whether it will it pay benefits outside the country when you need it? And this is typically not the case.

The Odds Are Against Policy Portability

Private long-term care insurance is largely peculiar to the US, given that much of the world includes long-term care benefits into government-provided universal health coverage (a sad comment about the US). The absence of American-style private insurance systems abroad makes overseas long-term care coverage more challenging for many insurers, and therefore, much less common.

Generally speaking, the policies rarely reimburse you for your care, rather, they pay a provider. So if an insurer doesn’t offer benefits overseas, it’s likely that they don’t have a network that would enable them to justify the payment to a provider.” Furthermore, this infrastructure disconnect presents an additional problem for LTC insurers because it increases the risk of fraud. You can’t just hire a neighbor there to provide the care, instead, you will need a licensed professional, just as in the US.

What Does Your Policy Say?

Still, some policies do provide coverage outside the US, so you might be in luck already, but it can take some digging to discover whether your policy includes, excludes, or limits regarding benefits abroad. You should probably call the insurance company or your insurance broker and have them help find and decipher the relevant sections of your policy.

To understand your existing policy, if you have one, you should first, look in the table of contents for the ‘Exclusions and Limitations’ section, which is usually located near the back of the policy. That will list the policy limits that apply outside of the US, or it may direct you on to an international benefits section for more details.

Even if your policy covers care outside the US, it will probably vary on what for and home the payments abroad will be. So be aware that there are almost as many variations to payment inclusions/exclusions as there are long-term care insurance companies.

Policy Provisions

When evaluating your current policy or looking at a new one, you need to understand not only if they provide for LTC reimbursement, but under what conditions. For example:

We will pay Benefits for International Coverage if You qualify under the conditions defined in this section where “International” means any location outside of the United States and its territories.

Eligibility for Payment of Benefits for International Coverage

In order to receive benefits payments for International Coverage under this Policy, You must meet all of the following:

1. Be outside the United States and its territories
2. Provide proof, satisfactory to Us, that You are Chronically Ill
3. Be eligible for Benefits under this Policy
4. Satisfy the Elimination Period for International Coverage
5. Provide a written Plan of Care that includes the Qualified Long Term Care Services You need.

International Coverage Is All Over The Map

Here’s is a breakdown the overseas coverage of LTC policies, from best to worst:

• The best range from paying 100 percent of the policy benefits anywhere in the world, on down to policies providing 50 percent of the daily benefit amount outside the US.
• The next level might limit payment abroad to 10 times the daily benefit per month (so approximately 30%), or pay 100 percent of benefits for one year with the remaining benefits payable only in the US, or provide 50 percent of the usual benefits for one year of home care abroad.
• The rest pay reduced benefits beyond US borders (such as 50 percent for nursing home care and 25% for home care) for no more than four years, or limit total benefits abroad to between 30 and 100 times the policy’s daily benefit, or provide no benefits whatsoever outside the US, its territories and possessions.

In addition, some policies pay full benefits in the US, Canada and the UK, some just in the US and Canada, and some won’t pay benefits at all in countries where US sanctions prohibit payment.

There Is a ‘Catch’

It is not uncommon that to obtain an International LTC policy, you must have a legal US residence, and you must buy the policy before you move out of the US. So if you are already living outside the US, and are now thinking about this sort of insurance, your slim list of options just got a lot slimmer.

Working With What You’ve Got

Even if you find that your policy does not meet your expectations as an expat, it doesn’t mean you should drop it. If your do decide to start a new plan that provides for international coverage, you need to make sure you understand what will be required to ensure continuity in your coverage (e.g., so there is no gap in your coverage). One consideration you need to factor in whether or not you would come back (to the US) to get the care you need.

Shop Around — and Rethink Coverage

If you’re between ages 55 and 70, when the cost of a LTC policy is still affordable, you might benefit by working with an LTC specialist or lawyer to find a new policy that better fits your expat needs and desires. But, as mentioned previously, be sure to hold on to your current policy until your new insurer accepts your application and premium payment (and you are sure there is no gap in coverage). And don’t move abroad too soon, because you’ll need US residency to apply for a different policy if the new one falls through.

Final Option

There is one more, and final option that many expats have opted for: You could simply drop (or forego obtaining) your long-term care coverage altogether. In fact, it’s often one of the reasons they chose to expatriate.