Long-Term Care Insurance in Maryland: Plan Before You Need It

Long-term care insurance in Maryland: what it is and why it matters

Long-term care insurance in Maryland is one of those topics most people put off until they wish they hadn't. More than half of Americans turning 65 today will need some form of long-term care during their lifetime, according to the U.S. Department of Health and Human Services. In Maryland, where long-term care costs can be substantial, waiting too long to plan can leave families scrambling financially at the worst possible time.

Below is a plain explanation of how long-term care coverage works, what Maryland residents should know about their options, when to buy, and how to think through the decision in a way that fits your life and budget.

What long-term care actually covers

Long-term care is not the same as medical care. It covers assistance with everyday activities, often called Activities of Daily Living (ADLs), when a person can no longer manage them independently. These include bathing, dressing, eating, toileting, continence, and transferring (getting in and out of bed or a chair).

A standard long-term care insurance policy typically pays for services delivered in several settings:

• Home care: a home health aide or personal care aide comes to the insured's home to provide assistance on a scheduled basis.
• Adult day programs: daytime supervised care outside the home, often used when a family caregiver works during the day.
• Assisted living facilities: residential communities that provide personal care, meals, and support but stop short of full skilled nursing.
• Memory care units: specialized facilities for people living with Alzheimer's disease or other forms of dementia.
• Skilled nursing facilities: the most intensive level of residential care, including 24-hour nursing supervision.

Most policies require that the insured be unable to perform at least two of the six ADLs, or have a severe cognitive impairment, before benefits begin. This is the standard trigger under federal tax guidelines, so policies that meet this standard may also qualify as tax-advantaged.

Why Medicare and Medicaid are not the full answer

Many Maryland residents assume Medicare will cover long-term care. It won't, at least not in any meaningful long-term way. Medicare covers short-term skilled nursing care after a qualifying hospital stay, but only for up to 100 days, and the benefit phases out quickly. After day 20, there is a significant daily co-pay, and coverage stops entirely after day 100.

Medicaid is a different story, but the conditions attached to it matter. Maryland's Medicaid program does cover long-term care for qualifying individuals, but eligibility requires that a person have spent down most of their assets first. The rules around asset limits, spousal protections, and look-back periods are complex. Relying on Medicaid as a plan usually means depleting savings that were intended for a spouse, children, or charitable goals.

Long-term care insurance is designed specifically to fill this gap: to protect assets and give people choices about where and how they receive care, rather than defaulting to whatever Medicaid will cover.

Long-term care costs in Maryland: what numbers to plan around

Maryland is not a cheap state for long-term care. The Baltimore-Columbia-Towson metro area, which covers much of Howard County, Anne Arundel County, and Baltimore County, consistently ranks among the higher-cost regions in the Mid-Atlantic. Care costs vary depending on the type of service, the location, and the level of amenities provided:

• Home health aide: costs depend on the number of hours needed per week and the provider; ask us for current local estimates.
• Assisted living (private, one bedroom): pricing varies by location and amenities, so contact us for guidance on what to expect in your area.
• Semi-private room in a nursing home: rates depend on the facility and its location; we can help you research realistic figures.
• Private room in a nursing home: typically higher than semi-private; costs differ by facility and region.

A multi-year care need, which is common, can represent a very significant expense depending on the level and duration of care required. That is a figure that can reshape retirement plans, force the sale of a home, or significantly reduce what a surviving spouse has to live on.

How long-term care insurance is structured

Traditional long-term care insurance works similarly to other insurance products. You pay premiums (typically monthly or annually), and if you trigger the benefit, the policy pays a daily or monthly benefit toward covered care costs. The key elements to understand are:

• Benefit amount: the maximum the policy will pay per day or per month for covered care. The right benefit amount depends on your situation, care preferences, and local costs; ask us for a comparison.
• Benefit period: how long the policy will pay benefits. Common choices are two years, three years, five years, or unlimited. A three-year benefit period is a popular middle ground.
• Elimination period: essentially a deductible measured in time. A 90-day elimination period means you pay for the first 90 days of care out of pocket before insurance kicks in. Longer elimination periods lower premiums.
• Inflation protection: one of the most important riders. Care costs rise over time, so a policy purchased at 55 with a $200/day benefit may need to cover $400/day or more by the time you use it. Compound inflation riders (3% or 5% compound) help keep benefits in step with actual costs.

Premiums vary considerably based on your age at purchase, health status, the benefit amount you choose, and the riders you add. Rates depend on your individual circumstances, so contact us for a personalized quote. Purchasing coverage earlier generally means lower premiums, and health issues that develop later can make coverage harder to qualify for or unavailable altogether.

Hybrid policies and alternatives worth knowing

Traditional long-term care insurance has one feature many people struggle with: if you never need care, you don't get the premiums back. That concern has driven strong growth in hybrid or linked-benefit products.

Hybrid life/long-term care policies combine a whole life or universal life insurance policy with a long-term care rider. If you need long-term care, benefits are drawn from the death benefit. If you never need care, your beneficiaries receive the death benefit. There is no "use it or lose it" dynamic.

Annuity-linked long-term care products work similarly but are built on a fixed annuity chassis instead of life insurance. You fund the annuity with a lump sum and the contract multiplies that amount for long-term care purposes if you trigger the benefit. These can appeal to people who have a lump sum (from an IRA rollover, the sale of property, or an inheritance) and want to reposition it into a plan that provides both growth and long-term care protection.

Neither hybrid approach is automatically better than traditional coverage. Hybrid policies tend to require a larger upfront commitment, while traditional policies often offer more benefit per premium dollar. The right choice depends on your financial picture, health, and goals. An independent agent who can compare multiple carriers is genuinely useful here because the product range is wide and pricing varies considerably.

Maryland also has a Long-Term Care Partnership Program worth knowing about. Partnership-qualified policies include inflation protection and allow policyholders to protect assets equal to the benefits paid by the policy if they later need to apply for Medicaid. This can be a meaningful asset-protection tool for people who are not wealthy enough to self-insure but want to preserve something for their family.

When is the right time to buy long-term care insurance in Maryland?

Earlier than most people expect. Purchasing coverage while you are younger and in good health generally results in lower premiums and a better chance of qualifying. For most Maryland residents, the practical window is somewhere between 55 and 62. Premiums are still reasonable, you are likely still healthy enough to qualify, and there are enough years before a potential need for inflation protection to do meaningful work.

Long-term care insurance is also medically underwritten. Various health conditions can result in a decline or a significantly rated policy. Waiting until a health issue surfaces can mean losing access to coverage altogether.

If you have already addressed disability insurance planning, long-term care is the natural next step in the same conversation. Both protect your income and assets when your health changes, just at different stages of life. You can learn more about short-term and long-term disability insurance options in Maryland if you haven't already addressed that piece of the picture.

What to look for when comparing policies

Not all long-term care policies are equal, and carrier financial strength matters more here than in most insurance lines. You may be relying on this policy 20 or 30 years from now, so you want a company that will still be around and paying claims. Look for carriers with strong financial strength ratings from independent rating agencies.

Beyond carrier strength, focus on these policy features when comparing options:

• Home care parity: some older or lower-cost policies pay less for home care than facility care. A policy that pays the same daily benefit regardless of where you receive care is preferable, since most people prefer to stay home as long as possible.
• Shared care: a rider for couples that allows them to draw from each other's benefit pool if one exhausts their own. This can be valuable if one spouse has a significantly longer care need.
• Premium waiver: most policies waive premiums once you start receiving benefits. Confirm this is in the policy, because you don't want to be paying premiums while simultaneously receiving care.
• Nonforfeiture options: if you have to stop paying premiums, a nonforfeiture benefit preserves some coverage rather than letting the policy lapse entirely.

Plan now with J.E. Schenk and Associates

Long-term care planning benefits from working with someone who knows your full picture and isn't limited to a single product. At J.E. Schenk and Associates, we are an independent insurance agency serving Metropolitan Baltimore and surrounding counties, including Ellicott City, Catonsville, Baltimore, Columbia, Sykesville, Eldersburg, Montgomery County, Prince Georges County, Anne Arundel County, and Western Howard County.

We can help you compare options to find what actually fits your situation. There's no single right answer for everyone, and we're not here to sell you the first thing we quote.

If you're thinking about long-term care coverage in Maryland or just want to understand your options before committing to anything, we're glad to walk through it with you. Reach out to our team at (410) 465-7474 or contact us online to start the conversation. The best time to plan is before you need the coverage, and we can help you figure out what that plan should look like.