Many individuals confuse Long Term Disability and Long Term Care Insurance. It may be because they both are triggered by health-related causes. However, these two insurance plans serve vastly different purposes in helping you manage the financial risk in your personal life:
- Long Term Disability Insurance is used to help protect your future earnings. It is designed to replace a portion of your income when you are not able to work due to a covered debilitating illness or disabling accident.
- Long Term Care Insurance pays a daily or monthly benefit towards the costs of care services from a skilled nursing home, assisted living facility, adult daycare or home assistance when you can no longer take care of yourself for the acts of daily living, e.g. bathing, dressing, or eating (custodial care).
We have outlined the differences between the two types of insurance to help you better understand the differences between these two important plans.
| GEBA Group Long Term Disability Insurance (LTD) | Long-Term Care Insurance (LTCI) | |
|---|---|---|
| Who Should Consider This Insurance? | Anyone who is currently working and relies on his/her salary for living expenses. May be important for singles and those who are sole providers for their families. | • Long-term care assistance may be required at any age. Most use this insurance to cover their care costs in the latter part of their lives as their health declines • Best to consider this insurance in your late 40’s and 50’s when you are healthy and able to secure lower insurance premiums • Individuals who can afford the premiums over time and either don’t have enough funds to self-fund their care or don’t want to use their own money for their care |
| Premiums | Based on: age, monthly benefit amount, and waiting period (premiums are lower with longer waiting periods) | Based on: age, health, daily or monthly benefit, elimination or waiting period, benefit period (1,3, 5, Lifetime), inflation protection, and home care benefit |
| Coverage | • Can provide a monthly benefit not to exceed the lesser of 67% of one’s gross monthly income (including other disability coverage) and the monthly benefit in force • Monthly benefit can be paid while disabled up to Social Security Retirement Age for disability commencing before age 60 | • Provides a daily or monthly benefit to cover the costs of long-term care services for pre-defined dollar limit based on benefit selection at time of application • Care services cover in-home care, as well as assisted living, adult day care and skilled nursing facility care |
| Why It May Be Important? | • Non-employer provided LTD provides tax-free income to cover living expenses, such as rent and food • Helps protect your assets • Allows you and your family to maintain a higher standard of living than if you had to rely solely on your savings or government assistance | • Covers care expenses over several years so you don’t drain your hard-earned savings and retirement income • Gives you options to determine where you receive care and the quality of care • Protects your assets and retirement income so that your loved ones maintain an acceptable lifestyle • Enables your family to supervise your care rather than provide the care • Health insurance does not pay for LTC |
Many people overlook both Long Term Disability and Long Term Care Insurance thinking that they won’t need it. You can play the odds or be prepared for the future by purchasing insurance protection. Having protection can be invaluable when you need it.
GEBA Member Services Representatives and Long Term Care Specialists are available to help you navigate the intricacies of insurance plans to find the best plan to meet your needs. You can schedule an appointment by sending an email to [email protected] or calling us at (800) 826-1126 for more information on these plans including features, costs, eligibility, renewability, limitations, and exclusions.
The Group Long Term Disability Insurance Plan is underwritten by New York Life Insurance Company, 51 Madison Avenue, New York, NY 10010 on Policy Form GMR.
