Your Customized Benefit Selection Process

The following is an abbreviated section from my book The ABC’s of Long-Term Care Insurancekeepin’ it REALLY simple for you, folks!

To simplify the benefit selection process, there are six major choices that impact a premium. Here is each choice and a recommendation.

1a) Daily or Monthly Benefit – Look at the average cost in your area for 8-10 hours of home care (or where you plan to move to when you retire), and decide if you want a plan that provides full coverage or if you are willing to pay part of the cost. If you are planning on self-insuring part of the cost, you can ask for an insurance quote that would pay 2/3 or 80%.

Tip: A monthly benefit is more flexible for home care.

1b) How do you want the benefit paid?

Reimbursement – the actual charge is paid up to the daily or monthly benefit. If you don’t use it all, you don’t lose it. The difference stays in your benefit pool to be used later. To collect benefits, you must provide proof of services from qualified caregivers.

Indemnity – you receive the daily or monthly benefit regardless of what the charge is. You still have to provide proof of services from qualified caregivers to receive benefits.

Cash – you receive a check each month and you can use the money however you need it, which means you can use it to pay informal caregivers like family friends, neighbors or sitters and companions provided by a caregiving agency. You don’t have to account for how you spend it

Pro: Cash can be especially helpful in rural areas when licensed caregivers can be difficult to find. It can also be helpful to pay for new services .

Con: if you hire your own informal caregivers, you will likely be responsible for the employer’s contribution of the caregiver’s Social Security, Medicare and state employment taxes.

Hybrid – For no additional premium, this is a new type of policy that allows you to take 40% of the home care benefit any month you like in cash and use however you need it.

2. Waiting Period (Elimination Period) – Shorter time periods are available, but most people choose a waiting period (deductible) of 90 days for two reasons:

• this is a one-time event in today’s policies no matter how many
times they have a claim;
• they aren’t worried about needing care for three months; they’re
worried about needing care for three years;
• many plans have made this a calendar day waiting period with no
charges required or some have even waived it for home care; or
• they bought the policy at work and 90 days was the only choice

3. Inflation Protection – This is the factor that you choose to make your benefits grow each year.

Tip: BUY IT. Would you buy health insurance that only pays hospital room rates at what they cost today?

Here are common inflation options and how long it takes the benefit to double so you can see how fast they grow:

5% compound 15 years
4% compound 18 years
3% compound 24 years
5% simple 20 years

The cost of nursing home care has grown 5-6% compound in the last 20 years which means it has tripled in that time period.24 Home care and assisted living has grown much slower but the demands of the baby boomers may accelerate the growth rate.

The 5% compound inflation factor that grows until you have used all your benefits is the most desirable of course. Premiums for this benefit have increased dramatically in the last three years. There are still a few solid carriers that haven’t made this type of inflation extremely costly, so if you want it, now is an excellent time to get it.

If you use the lower compound benefits or an inflation benefit based on the Consumer Price Index which will grow also around 3%, just start at a higher monthly benefit since it takes them longer to double.

Important: To get the asset protection equal to benefits paid by your long-term care insurance policy in those states that offer Partnership policies, you have to buy a compound inflation benefit if you are under age 61 when you apply for coverage.

4. Home Health and Community Coverage
This will be difficult for some people to hear but you must have a primary caregiver before this becomes a viable option. If you are younger (30s-50s) and you don’t know if you will have a primary caregiver, include the home care benefit if affordable to provide maximum choice when care is needed.

Note: If you live alone and your state allows it, you may be better off buying a “Facilities-Only” policy with “Cadillac” benefit levels; i.e. a monthly benefit high enough to get into the nicest assisted living facility in the area, 5% compound inflation for life, a longer benefit period, and the like. Not everyone is a candidate for home health benefits. Think about it. Most people can’t afford coverage that will pay 24 hours a day of home care, which would require a daily benefit of $400 a day or more. Someone living alone has to manage medications as well as personal care, plus cook meals and maintain a home.

If you considering an option for little or no home care benefits either for affordability or because you live alone, remember that the policy will still make nursing home care the last resort by providing coverage for the beautiful assisted living facilities that are going up everywhere.

5. Benefit Period/Benefit Maximum – This choice should be made after all of the above choices have been made. This is not how long you can be covered, by the way. You can be covered until you’re 104 if you live that long. It’s how long the policy will pay benefits when you become impaired enough to qualify for benefits. Choices are two, three, four, five, six, ten years and a few companies still offer an unlimited benefit period. Some companies offer a benefit maximum of $100,000, $200,000, $300,000, $400,000, $500,000 or $1,000,000. The length of time is determined by the monthly benefit you choose; e.g. $300,000 ÷ $4500 = 66 months (5.5 years). All will grow with inflation coverage, of course.

The important point here is that you should never sacrifice inflation coverage for a longer benefit period or a larger benefit account. Why? Because if you can’t make up the difference at claim time, you may have to apply for Medicaid and lose your private pay choices sooner rather than later. Even if you bought a Partnership policy, it won’t help you because the asset protection feature is based on how much the policy has paid out when you apply for Medicaid.

To help you with this decision, a major claims study by the Society of Actuaries showed that less than 15% of claimants are using more than four years of benefits. The average duration for all claims is 1.9 years but the average duration for claims that last longer than a year is 3.5 years.*  So buy as many years as you can afford and if it’s only two years, that’s two years of private pay choices that you might not otherwise have. If the benefits aren’t enough, you can apply for Medicaid and a Long-Term Care Partnership policy will protect your assets equal to the benefits paid out.

If you are on the other end of the spectrum economically and want a long or unlimited benefit period, my advice to you is don’t wait. The insurance companies are pricing the longer periods higher so now is the best time to buy the longer periods.

6. Non-Forfeiture – This benefit is something you can do without.

Summary: You can give up the home care as long as assisted living is covered. Do not eliminate inflation coverage. If the benefit is too small at claim time and you can’t make up the difference, you could wind up on Medicaid quickly (or whatever type of public assistance/welfare benefit is available at the time).

*Society of Actuaries LTC Experience Intercompany Study, 1984-2007, Table E-1


Skip to comment form

    • Michelle O'neill on December 8, 2020 at 10:33 pm
    • Reply

    What is best long term care company. In US

    1. Please allow me to reframe your question Michelle. Which one is the best for YOU? All you have to do is go to this link on my website and complete the short questionnaire. That puts you in our queue to get help from one of my amazing team to figure that out for you. While you are there, you will learn a lot by watching my 17-minute video on that page.

    • Tony on August 21, 2020 at 1:43 pm
    • Reply

    I have been getting quotes for LTC. Is it better to take the plan that if you don’t use it you loose it? Or a plan that will pay you something if you do not use ?

    1. Excellent question Tony. It depends on how you view insurance. Do you worry that you haven’t had a fire and gotten your money’s worth out of your homeowner’s policy? Or do you try to make sure you have at least one wreck a year to justify the premium for your auto insurance? When people ask what if I never need my LTC insurance, I say “How do you want to need it? A brain tumor? Alzheimer’s? a massive stroke?” The most important thing Tony is to get the coverage you need. The kind of policy that returns the premium to someone if you don’t need care costs more. I would rather see you go with one of the newer policies with a very low chance for a rate increase than settle for less coverage than you need in order to leave money to someone. If you want to see options, all you have to do is go to this link on my website and complete the short questionnaire. That puts you in our queue to get help. While you are there, you will learn a lot by watching my 17-minute video on that page.

    • Tim on June 25, 2020 at 9:56 am
    • Reply


    I am one those of family members who gave up a career to take care of my parents for 8 years and I do not want anyone to be forced to make that decision when I need care. I’m a 55 year old and after reading Suzie Orman’s book I am asking myself the tough questions.

    I have been receiving quotes for LTC but none of them contain inflation protection. Is this a standard component of LTC or should I request it? Also, why should I skip a Non-Forfeiture benefit?

    Thank you – your site is so informative

    1. Oh my stars Tim! Whoever is showing you LTC insurance with no inflation doesn’t know what they’re doing. Run, don’t walk away. Depending on your state, care can easily cost $20,000 a month in 25 years, the average age when you might need care. Although, you can need it at any time, not just when you are older. My formula is to project the future cost of a “country club” assisted living facility at 5% compound, then back into how much monthly (or daily) benefit to start with at 3% compound. Why? because the insurance companies don’t want to sell 5% compound anymore because it grows so fast. 5% compound doubles the benefits in 15 years, whereas 3% compound doubles them in 24 years. We are happy to help you. Please complete the short questionnaire on my website so we can help you as soon as possible. Please watch my 17-minute video while you are there and you will see why I feel so strongly about inflation coverage.

    • Todd on May 5, 2020 at 4:01 pm
    • Reply

    I am 47 yrs old and my wife is 44 yrs old and we are both active duty military. I’m thinking we may be too young to start paying premiums; when do you think we should consider purchasing? I’ve researched the FLTCIP; is there a better plan out there? Maybe one that offers a shared benefit for both of us, or one we can pay premiums for a set amount of time and then stop vice paying premiums until we need it (or possibly until we die)? Thanks.

    1. Hello Todd – you are very smart to investigate LTC insurance now. Christopher Reeve was younger than you when he fell off that horse and became a quadriplegic. FLTCIP is a great policy but there is another one with a great shared benefit and a 10 year payoff opportunity. Please complete the short questionnaire on my site and you will be contacted very quickly.

    • Phyllis Angelle Roy on June 5, 2019 at 10:28 pm
    • Reply

    Long Term are Policy – Louisiana — Bonjour Phyllis, we have an LTC policy with CNA through my husband’s employer. I was denied years ago for a pre-existing condition, Osteoarthritis. Do you think CNA is a reliable company? My husband is a cancer survivor “27 yrs”, and has heart disease.

    My question. . . If CNA is not the most reliable, can other LTC providers deny because of pre-existing conditions? I need a LTC policy, age 60.

    What we are looking for:
    In-home personal care == 8-10 hrs.
    our ages == both 60 yrs of age
    We both have pre-existing conditions
    State == Louisiana


    1. Bonjour mon ami! Comment t’allez vous? CNA is paying claims. I may be able to help you with additional home care benefits even if you have current health issues. But I won’t know until we talk. Please go to my calendar and schedule a time with me at your convenience. Phyllis Shelton’s calendar

    • Brian on January 7, 2019 at 10:17 am
    • Reply

    Hi Phyllis, my question is concerning the Medicaid Partnership qualified plans. My wife and I are eligible for the FLTCIP but noticed that it is not a participant in the Partnership. Should we look for one that is a participant and why/why not, is it important? I’m 59 and a retired USAF E5, she is 53 and an O6 over 30yrs in the US Public Health Svc.

    1. Brian, you have raised a very interesting question. The FLTCIP does not participate in the Partnership. I sure wish it did. However, the FLTCIP is the most affordable LTC insurance plan available today, and a huge advantage is that the home care benefit can pay informal caregivers like friends and family. That’s the trade-off. The Partnership protects your assets dollar for dollar if the insurance isn’t enough and you need to turn to Medicaid. If you have Alzheimer’s in your family history, particularly parents, then buy the longest benefit period you can afford. I lean toward the FLTCIP for the robust benefits for the dollar. Hope this helps with your decision.

    • Brittany on February 21, 2018 at 10:31 am
    • Reply

    Phyllis – What are your thoughts on the Federal LTC insurance program (Offered/Sponsored through Office of Personnel Mgmt & insured by John Hancock)? How does it hold up as far as cost comparison, etc? I’ve done the cost comparison with other insurers and the FedLTC policy quotes seem to be far cheaper; what is more difficult to determine is how often & how much they have historically raised premiums by in comparison to other firms. Any insight?

    1. The Federal LTC Insurance Program (FLTCIP) is a great program Brittany. The insurance company behind it is John Hancock. There have been two rate increases and deep in the FLTCIP website, I found a statement that the chance for another one is about 12%. The home care benefits are really good as you can hire informal caregivers like family and friends. It is less expensive than the open market. Just be sure to get 4% or 5% compound inflation.

    • Elsa on January 25, 2018 at 2:06 pm
    • Reply

    HI Phyllis,
    I have received a quote for an LTI from Mutual of Omaha Insurance Co.presented by my First Command Financial Advisor.Can you pls.have a look at it?.The jargon is so foreign to me.I just need to know if this is a good quote for my age and circumstance.I’m a 49 yr old mother of 2 teenagers who is recently widowed.Can I fax it to you?

    1. I’m happy to look at the quote Elsa. I see that you completed the short survey on my website so I can learn more about you. All you have to do now is reserve a time with me in the FIRST column (blue-Telephone 1) on our calendar here. It will be helpful if you can fax the Mutual of Omaha quote to me at 615-590-0307 or email it to me at You are so smart to plan for LTC at your age Elsa, especially since you have two teenagers that you will be raising as a single mom.

    • Patricia on June 27, 2017 at 8:44 pm
    • Reply

    Hi Phyllis, interested in your thoughts about my husband and I enrolling each of us in both of our employer–based long term care plans. He has access to the federal LTC plan and my employer offers First Unum fixed dollar indemnity plan with four options. We are both 55 and thought it would be good to go with fed plan for 150/day, 4% interest and 3 years and then have my employer as supplement with 3 years, 3500/mo and simple interest (only option). We’re mostly interested in using this as supplement to our savings and hoping to apply it to more home/community-based care, if possible. Is that overkill or is there any reason to stick with one LTC plan rather than 2 or is this a good option? Thanks for your help!

    1. This is not overkill. You are young and in 30 years, the First UNUM plan will have grown to $8,575 and the Federal plan will be at $14,595 for a total of $23,170. You will need every bit of that to pay for a “country-club” assisted living facility. Home care is growing half as fast so that will buy you a LOT of home care. You just never know when home care becomes no longer practical, especially for a surviving spouse when it is no longer safe to live alone. Both are great plans for home care. The Federal plan will pay informal caregivers and even family members for a limited time. UNUM is indemnity and will pay the full monthly benefit regardless of the charge so you can hire informal caregivers in addition to a licensed caregiver. The most important thing is that you are planning for LTC at your age…the kindest thing you can do for each other and for your family.

        • Patricia on July 14, 2017 at 6:50 pm
        • Reply

        Thanks, Phyllis. The Fed LTC rep suggested we consider FPO instead of the 4% compound interest to lower costs and consider future options. Is this something worth considering, or is it just safer to stick with straight compounded interest? Thanks.

        1. NEVER consider FPO (Future Purchase Option), Patricia. That’s like buying term life insurance. You pay for the additional benefit at your attained age, and the day will come when you can’t afford to buy more. The cost of care will keep rising, and you will have a big shortfall when you have a claim. It’s great for the insurance company as it limits the payout at claim time. Very bad for you.

            • Patricia on July 15, 2017 at 9:21 pm

            Thanks so much!

          1. You are so welcome!

    • Camille Garber on February 1, 2017 at 10:03 pm
    • Reply

    what is your opinion on LifeSecure as a company? My workplace is offering enrollment, with easy enroll and discounts.

    1. LifeSecure is a great company Camille. That’s the company we use for worksite enrollments. It is owned by Blue Cross Blue Shield of Michigan. Just be sure to get the inflation coverage. If you live in a long-term care Partnership state, that is required for the asset protection if the insurance isn’t enough and you ever need to turn to Medicaid for help. Click here to see a map of Partnership states.

    • Michele Brown on June 28, 2016 at 1:53 pm
    • Reply

    Hello, I am looking at several insurance company agent has sent me. I receive a quote for LifeSecure which is a Blue Cross Blue Shield Company, however I can’t find an AM Best Rating for them. Do you have any financial rating information on them. I see that MedAmerica is also affiliated with Blue Cross Blue Shield. What are the difference in the Long Term Care insurance policies that these companies offer?

    Also, are they questions I should be asking of my agent to determine his qualifications?

    1. Hi Michele, it’s good that you are doing your homework. LifeSecure is owned by Blue Cross Blue Shield of Michigan. You won’t find a rating on it because BCBSMI stands behind it. MedAmerica is owned by Excellus BCBS in New York but no longer sells new policies. Feel free to use my suggestions in “Your Customized Benefit Selection Process” for policy design.

        • CJ on November 9, 2016 at 2:32 pm
        • Reply

        Med America isn’t a life insurance company and therefore doesn’t qualify for the insurance guarantee that New York state offers should they go out of business. With Med America discontinuing sales how will they be able to pay for their existing policy’s in 20, 30 or 40 years ? I have a partnership policy I purchased with them and I’m 4 payments in on a 10 year pay in full plan will they be around when I need them ? I am surprised that the partnership didn’t account for one of their partners going out of business.

        1. I talked to Bill Naylon, the president of MedAmerica about your concern. He is aware of this New York caveat. He said MedAmerica’s claims experience is right on track with projections. The reasons for the rate increases are several. The lapse rate has been much lower than expected, and this is true across the industry. People treat long-term care insurance like gold and don’t let it go because it isn’t easy to get. And of course people are living longer which means there is a greater chance they will use their policy. The life expectancy tables were just revised again, which really impacts life insurance premiums. The biggest reason rate increases are needed however is the continuing low interest rates in the economy. When a carrier prices for earning several points higher on reserves and earns several points lower, it has a tremendous impact on pricing. MedAmerica has held off longer than many carriers but finally has to take action. The New York Dept of Insurance looks at it like it’s more important for MedAmerica to stay in business and fulfill its obligations, so the DOI approves the rate increases when they are justified with the necessary actuarial memorandums. MedAmerica is very well managed and their first priority is to pay claims and provide great customer service. They are taking the steps they believe are necessary to do that. It also helps that they are a fully-owned subsidiary of Excellus Blue Cross Blue Shield. That’s really important because Excellus has a huge presence in New York and will do whatever is necessary to maintain that position. This economic impact fact sheet shows you how committed they are to the state. The parent company of Excellus is The Lifetime Healthcare Companies, a $6 billion nonprofit company also headquartered in Rochester, N.Y. I tell you all this to say there is TREMENDOUS support to ensure that help from the guaranty fund will never be needed by MedAmerica policyholders.

    • Lynn Andrews on November 19, 2015 at 7:52 am
    • Reply

    I have the option of buying ForeCare Individual Annuity with Long-Term Care Insurance. What are your thoughts about this type of LTCI? Thank you.

    1. I think it’s a great option if you make sure the coverage is as meaningful in the future as it is today. You should do these things:

      1) Determine the monthly cost of a “country club” assisted living facility in your area or in the area you plan to live in retirement.
      2) Project that cost at 5% compound for 20 or 30 years, depending on your life expectancy.
      3) Ask yourself how much of that cost you want your insurance policy to pay…half, 2/3, 80%, all of it?
      4) Check the Forethought illustration and be sure it is going to provide that amount at that time.

      For example, if a really nice assisted living facility costs $4500 a month today, that would grow to about $12,000 a month in 20 years and about $20,000 a month in 30 years. So if you wanted the policy to pay half, you would make sure it will pay at least $6000 a month in 20 years and at least $10,000 a month in 30 years. A good compound calculator is

      I am using the cost of an assisted living facility because home care is growing much slower…maybe 2% a year, so the future cost of a “country club” assisted living facility should provide you with significant home care benefits as well. If you need me to review the illustration more, please email it to or fax it to him at 615-590-0307.

  1. Hi Phyllis, I am torn between buying LTC where if I don’t use it, I lose the premiums paid and buying a Whole life insurance policy with a LTC rider. Which is better?
    Thanks, Judy

    1. Combos can work great if you design the plan correctly. Most people don’t. It’s so important to build any plan by looking at the future cost in the area in which you see yourself retiring and build the monthly benefit so you can make up the difference between what it pays and the charge at the time.

    • debra acocella on May 8, 2015 at 6:28 am
    • Reply

    I have Genworth which I purchased at age 55 yrs old, and now I am 58 yrs old., want to keep it , I have NY partnership, I got this when AARP endorsed them, I see their stock is plummeting and hope they will be in business when I need them, can I fax you my policy page so you can review it and advise me. I am paying $2750 which has not increased as of yet. I truly would appreciate your input. please fax me your number . much appreciated , I am single with no kids.

    1. Hello Debra – yes of course I will review your policy. Genworth is by far the largest carrier offering LTC insurance and they are taking a number of steps to ensure that claims will be paid. My fax number is 615-590-0307. Thanks,

      Phyllis Shelton

    • Chris on January 27, 2013 at 10:10 pm
    • Reply

    You actually make it seem really easy along with your presentation but I to find this matter to be actually something that I believe I’d never understand. It sort of feels too complex and very broad for me. I’m taking a look ahead on your subsequent submit, I’ll attempt to get the cling of it!

    1. My goal in life is to make planning for long-term care easy Chris. If you want to proceed, just to to the contact us page on my site and complete the short questionnaire. Thanks!

      Phyllis Shelton

      • Gina Marie Taylor on March 12, 2019 at 11:35 am
      • Reply

      Im caring for a lady in early dementis. Her husband has LTCI thru John Hancock. She is also on medicare. They want my certifications before they will reimburse him. Im thru an agency now but im trying for under table for personal reasons. If im not certified, and not on books, can he still get reimbursed? How can we achieve this?

      1. No, your client cannot get reimbursed with a John Hancock policy unless you are certified as a home health aide. You don’t have to come through a home health agency, but you do have to proof to John Hancock that you have your home health aide certification. John Hancock is a reimbursement policy as most LTCi policies are, which means benefits are paid for eligible charges up to the daily or monthly benefit. Any amount unused stays in the benefit account and makes it last longer. A cash plan would pay your client regardless of the charges and the family could use the money however they like and pay whomever they like to be a caregiver. These plans are very rare today.

    • Elizabeth on December 14, 2012 at 11:15 am
    • Reply

    I am 49 years old and my financial advisor has quoted me some rates on long term care insurance. he advised that the rates are going up next year and now would be a good time to buy it. I am in a quandry trying to figure out whether it is worth paying around 3000/year now for a policy. I live alone and may have enough money to pay this out based on my savings. I have 700,000 dollars that is for my retirement right now and will inherit about 400,000 (in today’s value) at some point. This is a Genworth plan and I live in California. I also don’t know whether I will retire and die here. I am considering moving to Europe. So much to consider… Is now the right time to buy given all my questions? Thanks, Elizabeth

    1. Your financial advisor is 100% correct, Elizabeth. Now is the time to buy it as it will get more expensive sooner rather than later. Also, gender rating is going to start next year which means women will have to pay more and single women will have to pay the most. In my opinion, you don’t have enough money to self-insure. Some plans have international benefits and there is one plan (MedAmerica Insurance Company) that is all cash and provides world-wide coverage. All cash means you get a check each month after qualifying for benefits and you can spend it however you need it. It is owned by the Blue Cross plan in Rochester, New York and is available in California. Several plans have a partial international benefit. Please don’t wait. You also have your insurability to consider. I see way too many people in their 40s who have developed a progressive health condition and can’t qualify for long-term care insurance.

    • Maureen on October 28, 2011 at 10:29 pm
    • Reply

    I am 62yrs old and my employer has decided to offer LTC with 90days elimination period with buy more coverage over time and3%and 5% increase for life compound.The daily benefit starts at $150 and ends at .$300. The monthly payments start at $100 and $171 at this time.Can you advise me on the best action to take. Thank you Maureen

    1. The 5% compound is the best, Maureen. The “Buy more coverage over time” option is the most expensive as your premium will continue to increase each time you buy more. The 5% will make your benefits double every 15 years. The 3% takes 24 years for them to double. The daily benefit choice is influenced by the cost of care in your area and how much of that cost you are willing to pay out of your own savings. You can see some cost of care surveys under “Cost of Care” on this website. My advice is to buy as much as you can afford at your current age. It will only cost more as you get older and you may have a health problem that doesn’t allow you to buy later. Finally, thank your employer for offering this essential benefit!

  2. Thanks for stopping by Maryanne. Most people need long-term care insurance and the younger you buy it, the more affordable it is. Plus, you have a much greater chance of being able to qualify with good health. Some plans have preferred health discounts of 5%-15% and it’s really nice when you can get one of those.

    • Maryanne on March 15, 2011 at 6:42 pm
    • Reply

    Hi and thanks for finding the time to explain the terminlogy towards the newbies!

Leave a Reply

Your email address will not be published.