Why are Short Term Care Insurance Plans helpful

Why are Short Term Care Insurance Plans Helpful?

When people need help with daily activities, long-term care is often needed. This type of care is very expensive. That’s where short term care insurance can help. It provides benefits to cover costs. But what exactly are these plans?

What is Short Term Care Insurance?

Short term care insurance plans are a type of supplemental coverage. They pay benefits if you need help with basic activities. This could include dressing, bathing, eating, or using the bathroom.

With a short term care plan, you get cash benefits for each day or month you receive care services. The money can be used however you want.

Short term care insurance benefits are designed to cover expenses like:

  • Home health care services
  • Adult daycare services
  • Assisted living facility costs
  • Nursing home care
  • Caregiver assistance at home

The coverage is meant to be temporary. Short term plans typically provide benefits for 1 year or less, unlike traditional long-term care insurance.

Benefits of Short Term Care Plans

There are several key benefits of short term care insurance:

Affordable Premium Costs Premiums are generally much lower than long-term care insurance. A short term plan may cost $100-$300 per month.

Simple Medical Underwriting These plans have easy approval that often only requires answering a few health questions.

Cash Benefits Paid Directly You receive a set cash payment without dealing with reimbursement claims.

Use Benefits However You Want The cash can be used for any care costs – skilled care, family caregivers, supplies, etc.

Benefit Period is Limited Coverage is temporary, usually 3-12 months of benefits per qualified period of care.

Short Term Care Needs Are Covered Plans can provide financial relief when recovering from an injury, illness or after surgery.

Overall, short term care insurance offers basic coverage for temporary situations when care assistance is needed. It fills a niche compared to long-term care policies.

Who Should Consider Short Term Care Insurance?

While not for everyone, short term care plans may make sense if you:

  • Can’t afford or don’t qualify for long-term care insurance
  • Need coverage for a temporary or short period
  • Are recovering from an injury, illness or medical procedure
  • Have a loved one that requires caregiving help for a while
  • Want financial protection beyond what health insurance provides

Short term care coverage provides a solution when dealing with intermediate care needs or sudden changes in circumstances.

Different Types of Short Term Care Plans

There are a few different forms that short term care insurance can take:

Standalone Short Term Care Plan This is a dedicated policy specifically designed to provide short-duration care benefits, usually 3-12 months.

Rider to Life Insurance Policy Some life insurers offer a “short term care rider” that can be added to a whole life or universal life policy.

Employee Benefits Package Option Some employers offer voluntary short term care insurance as a benefit option for employees to purchase.

The coverage details vary, but all these plan types share the core concept of temporary care benefits.

Benefits Structures for Short Term Care Plans

Most short term care insurance plans structure their benefits in a few key ways:

Cash Indemnity Benefits

  • Pays a set cash amount per day or month while receiving care ($50-$500 per day is common).

Reimbursement Benefits

  • Reimburses a percentage of your actual care costs, up to a maximum daily or monthly limit.

Pooled Benefits

  • Plan provides a pool or bucket of benefits (e.g. $25,000) that can be used flexibly as needed.

Plans typically offer benefits for both skilled professional care and care from family/friends. But maximums and caps apply.

Qualifying for Short Term Care Coverage

Since short term care plans are more affordable, they have less stringent medical underwriting than traditional long-term care insurance.

Common qualification requirements for these plans:

  • Be under age 80-85 (varies by insurer)
  • Answer “yes/no” health questions
  • Not currently receiving or advised to receive care
  • Have not been unable to perform daily activities for a period

As long as basic health criteria are met, approval is generally guaranteed or simplified.

Ideal Times to Enroll in Short Term Coverage

Certain situations are ideal for applying for a short term care insurance plan, such as:

  • After a planned medical procedure or surgery
  • When recovering from an injury, accident or illness
  • If a loved one is diagnosed with a condition requiring temporary assistance
  • When other significant life changes impact care needs

The short application and enrollment process allows coverage to start quickly in many cases.

Short Term Care Plan Premiums and Costs

Compared to regular long-term care insurance, short term care plans are very affordable:

  • Monthly premiums average $100-$300 for individuals
  • Annual premiums average $1,200-$3,600 per year
  • Coverage for couples or spouses costs more

Premium rates are based on age, benefits selected, and some basic health information. Rates for women also tend to be slightly higher.

No matter the level, short term care insurance premiums cost far less than the expenses of paying out-of-pocket for care services.

Drawbacks of Short Term Care Plans

While beneficial in many cases, short term care insurance does have some potential drawbacks to consider:

  • Coverage is limited to temporary periods (1 year max is common)
  • Benefit pool maximums are relatively low compared to comprehensive LTC insurance
  • Plans do not satisfy federal long-term care insurance qualification rules
  • More comprehensive underwriting may still be required for higher benefit levels

For those with long-term or permanent care needs, traditional long-term care insurance is the better solution.

Alternatives to Short Term Care Coverage

If a short term care insurance plan does not fit your needs, some alternatives include:

  • Long-Term Care Insurance
  • Hybrid Life Insurance with LTC Riders
  • Life Insurance with Chronic Illness Riders
  • Critical Illness Insurance
  • Personal Savings or Asset-Based Solutions

Other options like Medicaid planning and irrevocable trusts also exist for long-term needs.

Does Short Term Care Insurance Make Sense?

For those with temporary care needs or as a stop-gap solution, short term care insurance plans provide valuable benefits:

  • Cash payments ease the financial burden of care services
  • Coverage picks up where health insurance leaves off
  • Affordable policies compared to comprehensive LTC insurance
  • Simpler medical eligibility for those with health issues
  • Useful option after injuries, illnesses or hospitalizations

The biggest strength of short term care insurance is providing financial relief and flexibility for unexpected short-duration situations requiring care assistance.

While not a complete long-term care solution, these plans absolutely serve a purpose for many individuals and families. The temporary coverage can prevent savings from being depleted in the short-run.

Even with limitations like coverage maximums and time limits, the affordability and simplicity of short term care plans make them an option worth considering. They provide a welcome financial resource when care is unexpectedly required for months, not years.

Have any questions? Call us at 980-272-8203‬