February 18, 2021

The facts about AARP long-term care insurance

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Key Takeaways:

  • AARP endorses certain long-term care insurance policies underwritten by New York Life. These policies are specially marketed to AARP members.

  • AARP long-term care insurance policies include traditional, stand-alone policies, and hybrid policies (which combine life insurance with long-term care benefits).

  • AARP long-term care insurance policies are priced according to age, gender, health status, and level of coverage.

  • Long-term care insurance policies can be costly, but AARP offers several levels of coverage to fit every budget.

It’s tempting to assume that if AARP endorses a product, it has to be high quality. And to an extent, that’s true. AARP likely wouldn’t risk its good name endorsing a shoddy product. But insurance is complex, and long-term care insurance has its own quirks.

Since 2016, AARP — one of the most trusted names for seniors — has endorsed long-term care insurance policies underwritten by New York Life.

Everything you need to know about AARP long-term care insurance

You may already be familiar with how traditional long-term care policies work. You pay an annual premium, and in return, you’re reimbursed for a set amount of long-term care services you use.

Few people know that a traditional long-term care policy isn’t the only option. There are also “hybrid” policies that combine life insurance and long-term care insurance. Although a hybrid policy will usually cost more than a traditional long-term care policy, it provides important benefits. If you don’t use the long-term care benefit, it becomes a death benefit for your beneficiary. With a traditional long-term care policy, you don’t get any money back if you don’t end up using it.

What long-term care insurance policies does AARP offer?

New York Life offers a few different long-term care options. Among these are:

  • NYL My Care

  • NYL Secure Care

  • Asset Flex

New York Life markets these long-term care insurance policies to AARP members under the name “AARP Long-Term Care Options” program. AARP members are referred to specially-trained, licensed New York Life agents who help them customize coverage for long-term care needs.

What benefits are included in AARP long-term care insurance policies?

AARP members have access to both traditional and hybrid long-term care insurance plans. Here’s a look at what these plans offer:

NYL Secure Care
This is a traditional long-term care insurance policy that offers some special features. For example, policyholders are eligible for dividend payments, which have the potential to offset some of the premium — but dividends are never guaranteed. Other benefits include:

  • Caregiver training for family and friends, making them eligible to be reimbursed for the care they provide

  • Premium waiver during a claim period

  • Optional benefit rider returning all paid premiums to the policyholder’s beneficiary upon the policyholder’s death (minus any claims paid out)

  • Optional shared care rider allowing a married couple with separate long-term care plans to use each other’s plan benefits

Asset Flex
This plan combines a universal life insurance policy with long-term care benefits, advancing your death benefit so you can use it for long-term care. If you don’t need long-term care (or need less than the death benefit allows), the death benefit minus any claims is paid to your beneficiaries. Plus:

  • If your long-term care costs exceed the amount of your benefit, you’ll receive a benefits extension of up to 48 months.

  • You have optional inflation protection that increases your monthly long-term care benefit over time.

  • If you use all of your long-term care benefit, your beneficiary still receives 10% of the original death benefit.

NYL My Care
Unlike most other traditional long-term care insurance plans, My Care is designed with features that may be familiar to purchasers, including a deductible and coinsurance. In addition:

  • You can choose from four coverage levels: Bronze, Silver, Gold and Platinum.

  • Your coverage increases up to age 70.

  • You have a premium waiver after you’ve met your deductible.

How much does AARP long-term care insurance cost?

To get your specific rate, you must contact a New York Life agent. AARP long-term care insurance plans aren’t available through other agents, and pricing isn’t available on the website. Premiums for long-term care insurance plans are based on:

  • Your age when you sign up

  • Your current state of health (you’ll likely have to submit medical records or undergo an exam)

  • Your gender (females typically pay higher premiums)

  • Your level of coverage

The graphic below shows an example of premiums under the My Care plan:

Bronze

Silver

Gold

Platinum

Monthly premium

$24.93

$49.86

$84.65

$119.45

Lifetime maximum benefit

$50,000

$100,000

$175,000

$250,000

One-time deductible

$4,500

$9,000

$15,000

$21,000

Reimbursement rate

80%

80%

80%

80%

Long-term care insurance plans don’t typically have a deductible. Instead, you must wait a certain number of days before your coverage kicks in. During that time, you are responsible for paying 100% of your care costs.

Many long-term care insurance plans also have a one-time, lump-sum premium. For example, with the Asset Flex plan, your long-term care benefit is equal to approximately five times the premium you pay to fund the plan, and your life insurance benefit is about one-and-a-half times that amount. If you paid a $100,000 premium:

  • Your long-term care benefit would be $461,695.

  • Your life insurance benefit would be $153,898.

The Asset Flex plan does allow you to spread your premium out over five to 10 years.

Can the cost of your AARP long-term care insurance plan increase?

Insurance companies cannot raise your individual premium. However, insurance companies can raise rates for an entire group of policyholders. To do this, the insurance company must get approval from the state where it requests the rate hike. In Connecticut, for example:

  • In 2019, New York Life requested a rate increase of 45.9% for certain long-term care policies sold between 2002 and 2012. This rate hike was approved.

  • Also in 2019, New York Life requested a rate increase of 17.1% for certain long-term care policies sold between 1997 and 2004. This increase was also approved.

Now, these policies are not the same AARP long-term care insurance policies that New York Life underwrites now. However, this example illustrates rate increase possibilities on the AARP policies in the future. If you want to know the history of rate increases on long-term care policies in your state for a specific insurance company, you can access this information through your state’s Department of Insurance. In many cases, filings are available to view online.

Andrea Bonner is a health care writer for Home Media based in Raleigh, North Carolina. She has a BA in English from Ohio State University and has more than 10 years of experience covering senior health. From physician practices to hospitals, surgery centers, health systems, and Medicare options, she is well versed in industry trends and senior health resources.