Is short-term care insurance right for you?

What does short-term care insurance cover, and who benefits?

Short-term care plans cover a variety of needs when you are temporarily disabled. Here's a look at what it can cover and what the out-of-pocket cost might be without insurance.

Benefit	Out-of-pocket cost
Nursing home room, shared	$327/day
Nursing home room, private	$375/day
Non-medical in-home care	$33/hour
Home health aide	$34/hour
Adult day health care	$100/day
Assisted living community health care	$194/day

Short-term care plans will pay between $100 and $200 each day to help with the cost of care, offsetting up to $6,000 a month in costs.

Benefits of buying short-term care insurance

Among the biggest selling points of this limited coverage is the price. Here are typical premium costs, according to the American Association for Long-Term Care Insurance, a trade group:

Age 65 with home care coverage only: $63 a month
Age 65 with home care and nursing home benefit: $125 a month

Additional benefits include:

Short-term care pays in addition to Medicare, while long-term care insurance doesn’t.
There’s no medical exam required, so the application process is faster and simpler, compared to the process for long-term care insurance. Typically, applying for short-term care involves just filling out a short questionnaire.
You can also still buy short-term insurance up to age 89, while most long-term care policies cut off applicants at about age 75.

How short-term care insurance works: Triggers, coverage and waiting periods

There are a few steps to buying and using your short-term care insurance policy.

First, you pick a benefit amount, usually offered in $10 increments from $50 to $300 per day, and the number of days (up to 360) that you want to receive the benefit.

The majority of policies go into effect immediately. That means the policy pays on the very first day you qualify for benefits. Most traditional long-term care insurance policies (about 94%) are sold with a 90-day deductible that must be met before benefits are paid.

The triggers for benefit eligibility for short-term care insurance generally are the same as they are for long-term care coverage. The policy pays for care when the insured can't perform at least two of six "activities of daily living" without help -- eating, bathing, transferring in and out of a chair or bed, dressing, toileting, and continence -- or has a cognitive impairment.

Short-term vs. long term care insurance: Key differences

The main differences between short- and long-term care insurance policies are the cost, the underwriting requirements and the length of coverage. Here's a comparison.

Short-term care vs. long-term care insurance
Short-term care insurance	Long-term care insurance
Coverage for up to 12 months	Several years to life
Simple underwriting with only a few questions	Complex underwriting and may require a medical exam
No waiting period	Waiting period of up to 90 days
Lower premiums	Higher premiums
Best for recovery from injuries, surgery and short illnesses, coverage during long-term care waiting periods	Best for ongoing care for chronic, long-term or terminal conditions

Who should buy short-term care insurance?

For some buyers, short-term care policies are a good addition to traditional long-term care insurance because they provide some protection for that 90-day period when you need care. For others who either waited too long to buy long-term care and are now priced out or for those who can’t afford it all but want some protection, short-term care is an affordable option.

It is true that some long-term care claims last for many years; however, almost half (49%) of long-term care insurance claims last one year or less, according to the short-term care advisory center.

The American Association for Long-Term Care Insurance suggested people who may be interested in short-term care insurance include:

A person declined traditional long-term care coverage.
Someone who wants a cheaper alternative to traditional long-term care insurance.
People over 80 years old.
Those who want to cover the elimination period in your long-term care policy.

Depending on the company, you must be somewhere between 40 and 89 years old. Some companies limit applicants further and don’t offer coverage after age 85.

As with any insurance purchase, research companies carefully. Some insurers are much easier to work with when it comes time to file claims than others. Look at company track records for complaints, and read the fine print to find out exactly what is covered and what isn’t. You’ll also want to decide how much you can pay yourself for care when calculating how much coverage you’ll need.

FAQ: Short-term care insurance

What is short-term care insurance?

Short-term health insurance policies offer coverage for less than one year. The coverage is not as robust as that of a standard health insurance plan. For example, a short-term plan may not offer as many benefits as a typical one. It might also lack some consumer protections.

Is short-term care insurance for seniors?

Short-term care insurance is designed to provide coverage for seniors who need assistance with daily living activities for a limited period, usually up to one year. It helps cover the costs associated with short-term care services such as nursing home care, assisted living facilities, or in-home care. This type of insurance can be beneficial for seniors who may not require long-term care but need temporary assistance due to illness, injury, or recovery from surgery.

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