We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms.
The choice between a reimbursement and cash benefit long-term care policy depends on your unique needs. Maskot
Shopping for long-term care insurance involves a wide range of decisions. What company will you purchase your insurance from? How much coverage do you need? What riders will you add to your coverage to customize it to meet your needs?
But, there’s one overreaching decision that’s just as important as all of those above – if not moreso. Will you purchase a reimbursement policy or a cash benefit policy?
With a reimbursement policy, your long-term care insurance provider will reimburse you for the cost of your care up to your benefit cap. So, if you pay $2,000 for an licensed home health aide, your reimbursement policy will offer a $2,000 reimbursement. With a cash benefit policy, you’ll receive your cash benefit as long as you are on claim (once a licensed physician certifies your need for care), regardless of what services you use. So, if you purchase a $4,000 monthly cash benefit, and you need long-term care, you’ll receive a check for $4,000 per month regardless of the type of care you use.
Of course, there’s a tradeoff to consider between the two. While cash benefit policies give you more access to your benefits and more freedom with regard to how you can use them, reimbursement policies are typically the less expensive option. So, which is better for you? That’s what we will break down below.
Compare your long-term care insurance options now.
Long-term care insurance: Reimbursement or cash benefit?
There are pros and cons to reimbursement and cash benefit policies. For example, if you choose the reimbursement option, you can rest assured that you can afford your future care, and the cost of your insurance may be lower than the cost of a cash benefit policy. Moreover, reimbursement policies are typically tax qualified – meaning you won’t pay income taxes on your benefits.
On the other hand, cash benefit policies give you more options in terms of how you’ll use your benefits when you need them. And, these policies usually provide 100% of your benefits in cash while you’re on claim. But,
Long-term care insurance: Reimbursement or cash benefit?
