Long Term Care - Plan Two

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...is a plan that many seniors can't qualify for and most can't afford.  The financial obligations of plan two, along with being rejected due to health reasons, are why less than ten percent of people today have plan two.  Plan two is when the senior buys a long-term care or nursing home insurance policy. 

But there are other issues associated with plan two that must to be mentioned.  The first issue is that insurance plans still require the individual to pay out-of-pocket expenses which the insurance policy does not cover.  Even when a good insurance policy exists, the out-of-pocket expenses the policy does not cover can still financially ruin a family.  Here are examples of expenses a policy will not cover.


The elimination period.  To lower premium costs, individuals commonly purchase policies with longer elimination periods of 60, 90, 100 days and sometimes more.  An elimination period is the initial period of time where the insured must pay all of the costs of their care.  The insurance policy will begin paying after that initial period.  Many believe Medicare will pay the costs incurred during the elimination period but in most cases, Medicare covers only limited portions of the cost.  Medicare will only pay if you meet all of the following qualifications.

You must have part A of Medicare and have days left in your benefit period.  The benefit period begins the day you are admitted as an inpatient in a hospital or skill nursing facility.  The benefit period ends when you have not received any inpatient hospital care or skilled nursing care 60-days in a row.

  • You must spend three full days in a hospital receiving inpatient care.  Outpatient care while in the hospital does not count as one of the three days needed to qualify.  Observation services do not count as part of an inpatient stay.
  • You must enter the skilled nursing facility generally within a 30-day period from leaving the hospital and the skilled nursing facility must provide skilled care related to the reason the patient was in the hospital.
  • Your doctor must conclude that you need daily skilled care given by skilled nursing or rehabilitation staff.
  • The nursing facility must be a skilled nursing facility.
  • Medicare will cover the first 20 days in full for each benefit period. 
  • Days 21 to day 100, Medicare will cover all costs minus a $152 co-insurance amount paid by the patient.
  • After day 100 the patient pays all costs.


A short fall in daily benefits.  Once again, with the goal of lowering the cost of the LTC insurance premium, the individual will often purchase a smaller daily room benefit than what a typical nursing home will charge.  Such as, the individual may purchase a $150 per day benefit knowing the average cost for care is in excess of $200.  The difference of what the policy pays and the rate the nursing home charges must be paid by patient. 

Further, the future costs of nursing home care often grow faster than the benefit increases provided within an insurance policy (if any exists).  Years down the road as the true cost of care increases, the spread between what is charged by a nursing home and what the policy will pay often widens.  Again, the out-of-pocket costs can be significant.


Excess Care.  When extra care is needed, the cost for this special care is rarely covered by the long-term care insurance plan.  In the past, this has added thousands per month to the cost of care.