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AARP Long-Term Care Insurance Review

·8 min read
AARP Long-Term Care
AARP Long-Term Care

The services that fall under long-term care are wide-ranging. In fact, they may be needed for the young and old, as it’s simply for those who have disabilities or debilitating health conditions. Long-term care is different from other kinds of healthcare in that it can involve what’s known as custodial care. This includes personal aid with bathing, using the bathroom, eating, getting dressed and more. As a result, it’s an extremely personal set of services that require specific knowledge. There’s a trio categories within long-term care: home care, assisted living and skilled nursing.

When considering long-term care, how to pay for it becomes a major question. That’s where long-term care insurance, otherwise know as LTC, comes in. Companies such as MassMutual, New York Life and others provide insurance that typically covers services that don’t fall in the scope of other kinds of health insurance. These services can include the activities of daily living (ADLs) listed above. Some policies also cover services and care related to chronic conditions, certain diseases or impairments from unexpected accidents.

Affording a long-term care insurance policy can be relatively difficult, especially if you don’t have enough saved. Many companies encourage looking into it and paying for a policy early. This is to avoid needing care unexpectedly. Insurance costs will depend on various factors, such as age, gender, types of benefits, durations of benefits, policy types (traditional or hybrid) and even existing health conditions, to name a few.

Regular health insurance, disability insurance Medicare are not designed to cover long-term care costs. Some ways to make up the costs include getting support from Medicaid, using a 1035 exchange plan, certain state partnership programs, various tax deductions or using an HRA to withdraw premiums.

It’s important to shop around and learn more about the different policies that are out there. According to the Long Term Care Insurance Price Indexes produced by the American Association for Long-Term Care Insurance, rates for virtually identical coverage could vary by over 110%. Given all the versions of long-term care insurance that are available, it may help to consult an experienced financial advisor as you make a decision.

Overview of AARP

The American Association of Retired Persons (AARP) was founded in 1958 by Ethel Percy Andrus, who was a retired high school principal. The association expanded the mission of the National Retired Teachers Association (NRTA), which was the organization founded in 1947 to address particular economic and health insurance needs of retired educators.

AARP’s headquarters are located in Washington, D.C., and it has office locations across the country. The company’s size is between 1,000 and 5,000 staff members. It’s also run by volunteer time and dedication, with a community of 60,000+ volunteers at the time of writing, according to the organization’s website.

There are a couple of things that make AARP a unique player in the larger context of this market. First, it’s a nonprofit organization, claiming a tax-exempt status from the IRS under code 501(c)(4). AARP offers membership, by which members receive resources, benefits and tools for a fee.

The other important thing to note is that AARP long-term care policies aren’t its own, as they’re underwritten by New York Life. Since AARP works on a membership basis, these New York Life policies are marketed to AARP members. As a result, it’s important to understand the long-term financial strength of New York Life, which is relatively stable. As of October 2020, New York Life received the following financial strength ratings:

  • “A++ (Superior)” rating from A.M. Best Company

  • “AAA” rating from Fitch Ratings (with a “Stable” outlook)

  • “Aaa” rating from Moody’s Investors Service

  • “AA+/Stable” rating from S&P

AARP Long-Term Care Policy Features & Riders

AARP Long-Term Care
AARP Long-Term Care

According to its website, New York Life can offer AARP members and other customers two basic long-term care insurance policies:

  • Traditional LTC Insurance: This policy is for those seeking only long-term care coverage. It’s designed to cover in-home and in-facility care, or care given by certified family members. Note that those who choose this type of policy usually have life insurance and retirement needs already covered.

  • Combination LTC and Life Insurance: This is the more versatile New York Life plan that can offer long-term care coverage if needed, life insurance if LTC insurance becomes unnecessary or a mix of both. Payments are made over a specific period of time, and there is a money-back guarantee. However, because funds are going to multiple uses, there will be less LTC coverage you’ll get per dollar than with the traditional plan. Care can occur either in the home, in an assisted living facility or in a nursing home.

There’s no way to get a direct LTC premium quote from New York Life’s website itself. However, there is a calculator on the company’s website that helps estimate cost of LTC care by region. Here are some examples:

Monthly rate for a two-bedroom unit in an assisted living facility (which includes supervision or assistance with activities of daily living)

  • New York City-Northern New Jersey-Long Island, New York: $8,477

  • Tucson, Arizona: $4,881

  • Baton Rouge, Louisiana: $3,666

  • Portland-Salem, Oregon: $5,781

  • National average: $5,227

Hourly rate for a home health aide

  • New York City-Northern New Jersey-Long Island, New York: $27

  • Tucson, Arizona: $27

  • Baton Rouge, Louisiana: $25

  • Portland-Salem, Oregon: $31

  • National average: $26

Daily rate for a semi-private room in a skilled nursing home (which includes continuous nursing care and support)

  • New York City-Northern New Jersey-Long Island, New York: $479

  • Tucson, Arizona: $201

  • Baton Rouge, Louisiana: $211

  • Portland-Salem, Oregon: $363

  • National average: $273

If you’d need financial support to pay for these LTC costs, insurance may be necessary. New York Life premium costs will vary, though, as they’re determined by age at the time of purchase, amount and types of coverage, length of waiting period, inflation options and any additional riders. In addition, the longer it takes for you to get LTC insurance, the more it’ll cost you.

New York Life product offerings vary by state. In terms of traditional long-term care insurance, there is a product bundle called NYL My Care. Additionally, NYL Secure Care offers more customizable benefits. When it comes to combination policies, New York Life’s policy is called Asset Flex, offering long-term care benefits, a death benefit (a payout to beneficiaries if the policyholder dies) or both. There are riders available, including an inflation rider.

AARP’s Customer Satisfaction

The National Association of Insurance Commissioners (NAIC) has a complaint index report for New York Life, the company that underwrites policies available to AARP members. There were no complaints about New York Life long-term care policies in 2020. There were three each for this category in 2019 and 2018. Only closed, confirmed complaints provided by state insurance departments are used in this NAIC report.

While the Better Business Bureau (BBB) does not categorize information about complaints, its website shows that New York Life receives a “A-” rating. A total of 12 customer reviews currently on the site assign an average star rating of 1.33 out of 5 stars. There were 104 complaints about the company as a whole logged over the past three years. A majority of them reported a problem with a product or service, while others reported billing issues, delivery issues, guarantee/warranty issues and advertising/sales issues.

Additionally, while AARP itself is not accredited by the BBB, information about it does exist on the BBB website. AARP receives an “A+” rating from the BBB. A total of 67 customer reviews on the site assign an average star rating of 1.22 out of 5 stars and 212 complaints logged over the past three years. A majority of them reported a problem with a product or service.

How to Contact AARP

To contact AARP and find out where there might be a physical location near you, you can call their customer service line at 888-687-2277 or visit the company’s website at aarp.org.

Bottom Line

AARP Long-Term Care
AARP Long-Term Care

Long-term care might be necessary for anyone. In fact, it may be necessary for both someone at an older age who requires assistance or someone who’s younger but suffers from an injury or chronic illness that prevents them from independently managing their daily needs.

When thinking about how to pay for this care, it’s important to shop around and learn more about the different policies that are out there. AARP policies underwritten by New York Life offer both a long-term care plan as well as hybrid options that combine life insurance and long-term care benefits.

Tips for Long-Term Financial Planning

  • If trying to plan for future care for you or a loved one makes you feel overwhelmed, consider consulting a financial advisor. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

  • The timing of when you apply for long-term care insurance coverage can affect what your premiums are, what your elimination period is and more. Check out SmartAsset’s guide for when to apply for LTC insurance to learn more.

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