Yes, Mutual of Omaha long-term care insurance can be worth it if you purchase it between ages 50-65, have significant assets to protect, and want coverage from one of the few remaining stand-alone providers. The value depends on your health, financial situation, and ability to afford potential premium increases.
The Health Insurance Portability and Accountability Act of 1996 created the framework for tax-qualified long-term care insurance policies in the United States. Under this federal law, benefits received from qualified policies are not taxable as income, and premiums may be deductible as medical expenses if they exceed 7.5% of adjusted gross income. The consequence of not having a tax-qualified policy means you lose these federal tax advantages, which can cost thousands of dollars over the life of your policy.
Nearly 70% of Americans turning 65 today will need some form of long-term care services during their lifetime. The average cost for a nursing home semi-private room reaches $8,641 per month in 2024, which equals $103,692 annually. Without insurance or planning, these costs quickly drain retirement savings and force families into difficult financial decisions.
What You Will Learn
🏥 How Mutual of Omaha’s two policy options work — including coverage amounts, elimination periods, and the specific triggers that activate your benefits under federal HIPAA requirements
💰 Real cost examples at different ages — showing exactly what you pay at 55, 65, and 70, plus how premium increases affect your long-term expenses and when rate hikes violate state insurance regulations
📋 The 6 Activities of Daily Living — understanding which two ADLs must be impaired to qualify for benefits, how doctors certify your need, and the legal consequences of improper documentation
⚖️ Partnership program asset protection — learning how state-qualified policies protect your assets from Medicaid estate recovery and which 44 states participate in these programs
❌ Common application and claims mistakes — identifying the medical conditions that result in automatic denial, the underwriting red flags that increase premiums, and documentation errors that delay benefit payments for months
Understanding Mutual of Omaha Long-Term Care Insurance
Mutual of Omaha Insurance Company operates as one of only six insurance carriers still offering traditional stand-alone long-term care policies in the United States. The company provides coverage in all 50 states through two primary product lines: MutualCare Custom Solution and MutualCare Secure Solution. Both policies meet the federal tax-qualified standards established under HIPAA, which means they provide specific tax benefits and must follow strict benefit trigger requirements.
Many large insurers exited the market between 2010 and 2020 because their actuarial assumptions proved incorrect. They underestimated how long people would live, how many would file claims, and how few would let their policies lapse. The company remains one of the last options for consumers seeking traditional long-term care coverage.
How Federal Law Governs These Policies
HIPAA Section 7702B defines what qualifies as a legitimate long-term care insurance contract for federal tax purposes. The law requires policies to cover chronically ill individuals who cannot perform at least two Activities of Daily Living for a period expected to last 90 days or longer. The consequence of buying a non-qualified policy means you cannot deduct premiums or receive benefits tax-free.
The Internal Revenue Code Section 213(d) allows premium deductions as medical expenses, but only up to specific age-based limits. For tax year 2025, someone age 60 can deduct up to $4,810 in annual premiums. Someone age 71 or older can deduct up to $6,020. The deduction only helps if your total medical expenses exceed 7.5% of your adjusted gross income and you itemize deductions.
Partnership Programs and Asset Protection
The Deficit Reduction Act of 2005 allowed all states to create Long-Term Care Partnership Programs that work with private insurance. These programs provide dollar-for-dollar asset protection if you exhaust your insurance benefits and need Medicaid. The consequence of not buying a partnership-qualified policy means Medicaid can claim your assets through estate recovery after you die.
Currently, 44 states plus the District of Columbia offer partnership programs. Alaska, Hawaii, Massachusetts, Mississippi, Utah, and Vermont do not participate. Partnership policies must meet additional state requirements beyond federal HIPAA standards, and the policies typically cost the same as non-partnership policies but provide significantly more asset protection.
The Two Mutual of Omaha Policy Types
Mutual of Omaha structures its long-term care offerings into two distinct products with different features and flexibility. Understanding these differences helps you choose coverage that matches your financial goals and care preferences.
MutualCare Custom Solution: Maximum Flexibility
The Custom Solution offers the most flexibility through a pool-of-dollars design. You select a total benefit amount ranging from $50,000 to $500,000 in $500 increments and choose monthly benefit amounts from $1,500 to $10,000. The policy calculates how long your benefits last by dividing your pool by your monthly benefit.
If you purchase a $200,000 pool with a $5,000 monthly benefit, your coverage lasts 40 months if you use the full amount each month. The consequence of choosing too small a pool means you run out of benefits before your care needs end. The consequence of buying too much coverage means you pay higher premiums for benefits you may never use.
This policy type offers six elimination period options: 0, 30, 60, 90, 180, or 365 days. The elimination period works like a deductible—you pay for care during this waiting period before insurance benefits begin. Choosing a zero-day elimination period costs significantly more in premiums but means benefits start immediately when you qualify.
The Custom Solution includes several optional riders that enhance your protection. The Survivorship rider waives premiums for the surviving spouse after one partner dies, but only if policies have been in force for 10 years. The Professional Home Health Care rider doubles your monthly benefit for up to 365 days when you need skilled services like physical therapy or wound care.
MutualCare Secure Solution: Predictable Coverage
The Secure Solution offers a simpler structure with set benefit periods of 24, 36, 48, or 60 months. You choose monthly benefits from $1,500 to $10,000, just like the Custom Solution. The key difference lies in how you receive benefits—you can select either cash payments or reimbursement for actual expenses.
The cash benefit option pays you a percentage of your monthly maximum regardless of your actual costs. Most policies offer a 40% cash benefit, which means if your monthly maximum is $5,000, you receive $2,000 in cash even if your care only costs $1,500. The consequence of choosing cash benefits means you receive less money overall but gain flexibility in how you spend it.
The reimbursement option pays your actual qualified expenses up to your monthly maximum. If your monthly maximum is $5,000 but care costs $3,200, the policy reimburses exactly $3,200. The consequence of choosing reimbursement means you receive full benefits only if your costs reach the maximum, but your benefit pool lasts longer because you only use what you need.
This policy offers three elimination periods: 90, 180, or 365 calendar days. Calendar days mean every day counts toward your elimination period, not just days you receive care. A 90-calendar-day elimination period ends 90 days after you become chronically ill, regardless of how many care days you actually used.
Comparing the Two Options
| Policy Feature | Custom Solution |
|---|---|
| Benefit Structure | Pool of dollars ($50,000-$500,000) |
| Elimination Periods | 0, 30, 60, 90, 180, 365 days |
| Inflation Options | 10, 15, 20-year compounding |
| Payment Method | Reimbursement |
| Survivorship Rider | Available (after 10 years) |
| Professional Care Rider | 100% benefit increase (365 days) |
| Policy Feature | Secure Solution |
|---|---|
| Benefit Structure | Set time periods (24-60 months) |
| Elimination Periods | 90, 180, 365 calendar days |
| Inflation Options | Standard compounding options |
| Payment Method | Cash benefit OR reimbursement |
| Survivorship Rider | Not available |
| Professional Care Rider | Standard benefits only |
What Long-Term Care Insurance Actually Covers
Federal law under HIPAA defines qualified long-term care services as necessary diagnostic, preventive, therapeutic, rehabilitative services, and maintenance or personal care services required by a chronically ill person. The consequence of receiving services not defined as qualified under federal law means the insurance company can legally deny your claim and you receive no benefits.
Covered Services and Settings
Mutual of Omaha policies cover care in four primary settings. Nursing home care includes skilled nursing facilities that provide 24-hour medical care and supervision, and the policy pays up to 100% of your monthly benefit for nursing home stays. Assisted living facilities receive coverage at the same percentage, which differs from some competitors who pay reduced benefits for assisted living.
Home health care covers services provided in your private residence through professional caregivers employed by licensed home care agencies. The policy covers personal care assistance with Activities of Daily Living like bathing, dressing, and toileting, plus skilled services provided by registered nurses, physical therapists, and occupational therapists.
Adult day care centers receive coverage when you need supervision and social activities during daytime hours while family caregivers work. The policy pays for programs run by licensed facilities that meet state requirements. The consequence of using an unlicensed adult day care center means the policy will not reimburse your expenses even if you need the care.
Respite care provides temporary relief for family caregivers when your regular caregiver needs a break. The policy covers professional caregivers who step in to provide temporary assistance, and most Mutual of Omaha policies include respite care as a built-in benefit without requiring it to count against your main benefit pool.
Care Coordination Services
Every Mutual of Omaha policy includes care coordination services at no additional cost. A licensed health care professional assesses your needs, develops an individualized care plan, and helps arrange services. The care coordinator must be either a registered nurse or licensed social worker with experience in geriatric care.
Using the care coordinator unlocks additional benefits called Stay at Home benefits. These include medical alert systems, home modifications like grab bars and ramps, caregiver training for family members, and durable medical equipment. The consequence of not using the care coordinator means you forfeit these extra benefits even though you already paid for them in your premiums.
What the Policy Does Not Cover
Mutual of Omaha policies exclude several types of care and expenses. The policy does not cover care resulting from acts of war, whether declared or undeclared, and it does not cover care needed due to attempted suicide or intentionally self-inflicted injuries. The consequence of these exclusions means you pay all costs yourself if your care needs result from these causes.
The policy does not cover services provided by family members unless they work for a licensed home care agency and provide care to other clients too. Your spouse cannot receive payment for providing your care, and your adult children cannot bill the insurance company for helping you. The consequence of this limitation means you must hire outside caregivers to receive insurance benefits.
Services already covered by Medicare do not trigger long-term care insurance benefits. The policy cannot pay for the same services at the same time as Medicare. The consequence of this Medicare coordination means you cannot use long-term care insurance to pay Medicare deductibles or copayments during the first 100 days of skilled nursing care.
How Much Mutual of Omaha Long-Term Care Insurance Costs
Premium costs vary significantly based on your age, health status, chosen benefit amount, elimination period, and inflation protection. Understanding these cost factors helps you budget accurately and avoid premium shock when you receive your quote.
Premium Examples at Different Ages
A 55-year-old individual purchasing MutualCare Custom Solution with a $150,000 benefit pool, $5,000 monthly benefit, 90-day elimination period, and 3% compound inflation protection pays approximately $2,800 to $3,200 annually. The same person choosing 5% compound inflation protection pays $3,500 to $4,000 annually. The consequence of buying at age 55 means lower premiums but more years of payment before you likely need care.
A 65-year-old purchasing the same coverage pays approximately $4,800 to $5,500 annually with 3% compound inflation. The 5% compound option costs $6,500 to $7,000 annually. The consequence of waiting until 65 means you pay 70% more in annual premiums than someone who bought at 55, but you avoid 10 years of premium payments if you stay healthy.
A 70-year-old faces significantly higher costs. The same coverage with 3% inflation costs $8,000 to $9,500 annually, and many advisors recommend shorter compounding periods at age 70, such as 20-year compounding instead of lifetime, which reduces premiums to $6,500 to $7,500 annually. The consequence of waiting until 70 means much higher premiums and increased risk of being denied coverage due to health conditions.
Couples Premium Discounts
Married couples or domestic partners living together for at least three years qualify for premium discounts. Mutual of Omaha offers a 15% discount when both partners purchase policies, which reduces a couple’s combined premium from $10,000 to $8,500 annually. The consequence of not buying together means losing $1,500 in annual savings.
The policy also offers a 5% discount for married individuals who buy a policy even if their spouse does not. This acknowledges that married people typically have a built-in caregiver and may need paid care for shorter periods. The consequence of buying as a single person when you are actually married means paying higher premiums unnecessarily.
Health Rating Classifications
Mutual of Omaha uses four health classification levels: Preferred, Select, Substandard Class I, and Substandard Class II. Achieving Preferred rates requires excellent health with no chronic conditions, ideal weight, and no use of walking aids. The consequence of falling into Select or Substandard classes means paying 25% to 100% higher premiums than Preferred rates.
Certain health conditions automatically disqualify you from Preferred rates. Any history of cancer except basal cell skin cancer prevents Preferred classification, and osteoporosis moves you from Preferred to Select unless you are under 60, have a T-score of -2.9 or better, exercise regularly, and take medication. The consequence of a family history of Alzheimer’s disease with two or more immediate family members means automatic denial of coverage.
Rate Increases and Premium Stability
Mutual of Omaha reserves the right to increase premiums by class of insureds, though they cannot increase your premium individually based on your personal claims or health changes. The company must prove to state insurance regulators that a rate increase is necessary to pay future claims. The consequence of the company’s actuarial miscalculations from the 1990s and 2000s means many policyholders face substantial rate increases.
Historical rate increase data shows some Mutual of Omaha policyholders experienced premium increases of 39% over two years, with a third year increase pending. Other policyholders report increases ranging from 25% to 50% over a 10-year period. The consequence of these increases means budgeting only for your initial premium leads to financial stress when increases arrive.
When you receive a rate increase notice, state regulations require the company to offer reduced benefit options. You can accept the full increase, reduce your benefits to keep premiums lower, or let your policy lapse. The consequence of letting your policy lapse means losing all the premiums you paid, though some policies offer nonforfeiture options that provide reduced paid-up coverage.
The Six Activities of Daily Living Explained
Federal law under HIPAA requires tax-qualified policies to use specific benefit triggers based on Activities of Daily Living. The policy must pay benefits when you cannot perform at least two of five specified ADLs from a list of six. The consequence of a policy using different ADLs or requiring only one ADL means it does not meet federal tax-qualified standards.
Bathing: Getting Clean
Bathing means washing yourself in a tub or shower, including getting in and out of the tub or shower. You are considered unable to perform this ADL if you need hands-on assistance from another person to complete the task. The consequence of being able to bathe independently means this ADL does not count toward your benefit trigger, even if bathing causes pain or takes a long time.
Hands-on assistance means physical help from another person. Verbal prompting or standby supervision does not count as needing assistance for bathing under most policies, but Mutual of Omaha policies provide benefits for both hands-on assistance and standby assistance. The consequence of this broader definition means you may qualify for benefits earlier than with other insurance companies.
Continence: Bladder and Bowel Control
Continence refers to your ability to maintain control over bladder and bowel functions. You are considered unable to perform this ADL if you are incontinent and require wearing absorbent products or need someone to help manage catheter equipment. The consequence of occasional incontinence means this ADL may not count unless the incontinence is regular and requires daily assistance.
Incontinence must result from a physical or cognitive condition, not from temporary illness or medication side effects. The policy requires medical documentation proving the incontinence is chronic and expected to last at least 90 days. The consequence of temporary incontinence from a urinary tract infection means this ADL does not trigger benefits because the condition resolves within weeks.
Dressing: Getting Dressed
Dressing means putting on and taking off all items of clothing, including braces, fasteners, and artificial limbs. You are considered unable to perform this ADL if you need physical assistance from another person to dress your upper or lower body. The consequence of being able to dress yourself even if it takes 30 minutes means this ADL does not count toward your benefit trigger.
The policy considers both upper and lower body dressing. If you can dress your upper body independently but need help with pants, socks, and shoes, you meet the criteria for needing assistance with dressing. The consequence of needing help only with small fasteners like buttons means this typically does not qualify unless you need help with the entire dressing process.
Eating: Feeding Yourself
Eating means feeding yourself by getting food into your body from a plate, cup, or table. This includes eating through a feeding tube or intravenously. You are considered unable to perform this ADL if you need physical assistance to eat or if you require tube feeding. The consequence of being able to feed yourself even if someone must prepare your meals means this ADL does not trigger benefits.
Meal preparation is considered an Instrumental Activity of Daily Living, not a basic Activity of Daily Living. The policy does not pay benefits based on IADLs. The consequence of being unable to cook but able to feed yourself means you do not meet the eating ADL requirement, though you may still qualify based on other ADLs.
Toileting: Bathroom Independence
Toileting means getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene. You are considered unable to perform this ADL if you need physical assistance from another person or if you use a bedpan or commode regularly. The consequence of being able to use the toilet independently with grab bars or raised seats means this ADL does not count toward your benefit trigger.
The policy requires that you need human assistance, not just assistive equipment. Installing a raised toilet seat or grab bars does not mean you need assistance with toileting. The consequence of using equipment but managing independently means this ADL does not trigger benefits until you require another person’s physical help.
Transferring: Moving Around
Transferring means moving into or out of a bed, chair, or wheelchair. You are considered unable to perform this ADL if you need physical assistance from another person to move. The consequence of being able to transfer independently with a walker or cane means this ADL does not count toward your benefit trigger.
The transfer must involve significant weight-bearing assistance. If someone simply steadies you or provides minimal touch assistance, this typically does not count as needing help with transfers. The consequence of needing only standby supervision means some policies do not consider this meeting the ADL requirement, though Mutual of Omaha policies do cover standby assistance.
Cognitive Impairment: Memory Loss and Dementia
Besides ADL impairment, Mutual of Omaha policies pay benefits if you have severe cognitive impairment requiring substantial supervision to protect yourself or others from health or safety threats. Cognitive impairment means deterioration or loss of intellectual capacity measured by clinical evidence and standardized tests. The consequence of having memory problems that do not create safety risks means you may not qualify for benefits based on cognitive impairment alone.
The policy requires objective clinical evidence of cognitive impairment. This typically means a Mini-Mental State Examination (MMSE), Montreal Cognitive Assessment (MoCA), or complete neuropsychological evaluation. The consequence of your doctor stating you have dementia without formal testing means the insurance company can deny your claim for lack of objective evidence.
Three Common Scenarios: Real-World Examples
Understanding how Mutual of Omaha long-term care insurance works in real situations helps you evaluate whether the coverage meets your needs and protects your assets.
Scenario 1: Early-Onset Need at Age 62
| Event | Financial Outcome |
|---|---|
| Sarah bought policy at 55 with $5,000 monthly benefit, 90-day elimination, 5-year period | Paid $3,600 yearly for 7 years ($25,200 total) |
| At 62, Sarah suffered stroke, unable to dress or bathe | Qualified for benefits based on 2 ADLs |
| Sarah paid $15,000 during 90-day elimination period in rehab | Used personal savings to cover elimination costs |
| Policy paid $5,000 monthly for home health care | Received $300,000 in benefits over 5 years |
| Sarah’s care costs averaged $6,200 monthly | Paid $1,200 out-of-pocket, policy paid $5,000 |
Sarah’s early purchase at age 55 proved valuable because she qualified for Preferred rates while healthy. The consequence of waiting would have meant much higher premiums or possible denial. Her $25,200 in premiums returned $300,000 in benefits, protecting her retirement savings from depletion. The consequence of having no insurance would have cost her $372,000 from personal assets, leaving little for her spouse.
Scenario 2: Late Purchase with Rate Increases
| Event | Financial Outcome |
|---|---|
| Robert bought policy at 68 with $4,000 monthly benefit, 90-day elimination, 3% inflation | Paid $5,800 yearly in premiums |
| Policy increased 3% compound yearly | Monthly benefit grew to $5,027 after 8 years |
| At 76, Robert got 30% premium increase notice | Premium jumped from $5,800 to $7,540 |
| At 79, second increase of 25% applied | Premium reached $9,425 yearly |
| Robert reduced benefits to keep premium at $7,000 | Monthly benefit reduced from $5,400 to $4,000 |
| At 82, Robert needed assisted living for Parkinson’s | Qualified for benefits based on transfers and dressing |
Robert’s decision to buy at age 68 meant higher initial premiums than if he had purchased 10 years earlier. The consequence of the two rate increases forced him to choose between paying $9,425 annually or accepting reduced benefits. He reduced benefits to keep premiums affordable, but this meant his coverage did not keep pace with inflation. The consequence of this choice meant paying more out-of-pocket during his care period than he originally planned.
Scenario 3: Partnership Program Asset Protection
| Event | Financial Outcome |
|---|---|
| Linda bought partnership policy at 57 with $200,000 pool, $5,000 monthly benefit | Paid $3,200 yearly in premiums |
| At 78, Linda needed nursing home for advanced dementia | Qualified based on cognitive impairment supervision |
| Policy paid benefits for 40 months until pool exhausted | Protected $200,000 in personal assets |
| Linda’s total nursing costs reached $450,000 over 6 years | Insurance paid $200,000, Linda paid $50,000, Medicaid $200,000 |
| After Linda died, Medicaid estate recovery began | Partnership program protected $200,000 from recovery |
| Linda’s children inherited $200,000 instead of nothing | Partnership protection saved family inheritance |
Linda’s partnership-qualified policy provided protection beyond the policy benefits. The consequence of buying a non-partnership policy would have meant Medicaid claimed all her remaining assets through estate recovery. The partnership program allows her estate to keep assets equal to the insurance benefits paid. The consequence of having no insurance would have meant spending down to $2,000 in countable assets before Medicaid eligibility and losing her entire estate to recovery after death.
Comparing Mutual of Omaha to Alternatives
Several alternatives to traditional long-term care insurance exist, each with different costs, benefits, and consequences. Understanding these options helps you choose the best approach for your situation.
Traditional Insurance vs. Hybrid Policies
Hybrid policies combine life insurance or annuities with long-term care benefits. These policies cost 2 to 4 times more than traditional long-term care insurance but offer a death benefit if you never use the long-term care coverage. The consequence of buying a hybrid policy means significantly higher upfront costs but guaranteed return of value through either care benefits or death benefit.
A traditional $200,000 Mutual of Omaha policy for a 60-year-old costs approximately $4,000 annually. A comparable hybrid policy costs $8,000 to $12,000 annually or a single premium of $100,000 to $150,000. The consequence of choosing the hybrid means less flexibility if your financial situation changes because you typically cannot reduce benefits or stop payments once established.
Self-Insurance Through Savings
Self-insuring means setting aside assets specifically for potential long-term care costs. Financial advisors typically recommend this approach only if you have $2 million or more in liquid assets and can afford to spend $100,000 to $300,000 without affecting your spouse’s financial security. The consequence of self-insuring with insufficient assets means depleting your savings if care needs exceed expectations.
Consider someone with $800,000 in retirement savings at age 65. Nursing home care costing $110,000 annually for five years totals $550,000, leaving just $250,000 for the surviving spouse. The consequence of no insurance protection means the surviving spouse faces potential poverty. Traditional long-term care insurance costing $5,000 annually preserves the $800,000 by paying most care costs.
Medicaid Planning and Spend Down
Medicaid covers long-term care for people meeting strict income and asset limits. In most states, individuals must have no more than $2,000 in countable assets to qualify. The consequence of the five-year look-back period means you cannot simply give away assets to qualify—doing so triggers penalty periods where Medicaid will not cover your care.
The look-back period immediately precedes your Medicaid application date and extends 60 months backward. If you transferred $100,000 to your children three years before applying, and your state’s penalty divisor is $10,000 monthly, you face a 10-month penalty period. The consequence of the penalty period means paying for care out-of-pocket during months when you no longer have assets because you already gave them away.
Some people engage in strategic Medicaid planning with elder law attorneys. This involves spending down assets on exempt items, transferring assets to irrevocable trusts well before the look-back period, or purchasing Medicaid-compliant annuities. The consequence of improper Medicaid planning means application denial, penalty periods, and potential legal issues if transfers appear to be fraudulent.
Reverse Mortgages for Long-Term Care Funding
A reverse mortgage allows homeowners age 62 or older to convert home equity into cash without selling their home or making monthly payments. You can use a reverse mortgage line of credit to pay for long-term care while remaining in your home. The consequence of using a reverse mortgage means reducing or eliminating home equity that would otherwise pass to heirs.
A $400,000 home with no mortgage might qualify for a $200,000 reverse mortgage line of credit. This credit line grows over time if unused, potentially reaching $350,000 after 15 years at current interest rates. The consequence of tapping the reverse mortgage for care costs means your heirs must repay the loan balance when you die or sell the home, typically by selling the property.
Reverse mortgages work better for paying for home care rather than facility care. Once you permanently move into a nursing home or assisted living, the reverse mortgage becomes due. The consequence of moving to a facility means the loan must be repaid within six months, potentially forcing a rushed home sale during a difficult time.
Pros and Cons of Mutual of Omaha Long-Term Care Insurance
| Pros | Cons |
|---|---|
| Stand-alone coverage available when few competitors exist | Premium increases of 25-50% over 10 years common |
| Partnership program participation in 44 states provides asset protection | Restrictive underwriting automatically declines walker/wheelchair users |
| Comprehensive care setting coverage at equal benefit percentage | Family members cannot receive benefits unless licensed agency employed |
| Multiple inflation options (10, 15, 20-year) reduce older buyer costs | Slow claims processing delays 2+ months with document loss |
| Care coordination services included at no extra cost | Medicare coordination blocks benefits during first 100 skilled days |
Stand-alone coverage availability
Mutual of Omaha remains one of only six companies offering traditional stand-alone long-term care policies, which means you have few alternatives if you want this type of coverage. The consequence of this limited marketplace means if you dislike Mutual of Omaha’s terms, your options for comparing quotes are severely restricted. This market concentration gives the company significant power in pricing and underwriting decisions.
Partnership program participation
The company offers partnership-qualified policies in all 44 states with partnership programs, which provides dollar-for-dollar Medicaid asset protection after benefits exhaust. The consequence of buying a partnership policy means your family can inherit assets equal to what your policy paid, rather than losing everything to Medicaid estate recovery. This protection can save your estate $100,000 to $500,000 depending on your policy limits.
Comprehensive care setting coverage
Both policy types cover nursing homes, assisted living, home care, and adult day care at the same benefit percentage, which differs from competitors who reduce benefits for certain settings. The consequence of equal coverage across settings means you maintain full flexibility in where you receive care without financial penalty. If you prefer aging at home rather than moving to a facility, your monthly benefit remains the same.
Multiple inflation protection options
The availability of 10, 15, and 20-year compounding periods allows customization based on your age and budget, which helps older buyers reduce premiums while maintaining some inflation protection. The consequence of choosing 20-year compounding at age 65 means your benefits grow for two decades and then remain level, providing a middle ground between no inflation protection and expensive lifetime compounding. This option cuts premiums by 30% to 40% compared to lifetime inflation.
Care coordination services included
Every policy includes professional care coordination from licensed health professionals at no extra cost, which helps you navigate the complex long-term care system and access additional benefits. The consequence of using the care coordinator means unlocking Stay at Home benefits worth thousands of dollars for medical alert systems, home modifications, and caregiver training. These services remain available even during the elimination period before insurance benefits begin.
Significant premium increases
Historical data shows many policyholders faced premium increases of 25% to 50% over 10 years, with some experiencing premium increases of 39% in just two years. The consequence of these increases means budgeting only for your initial premium creates severe financial stress when inevitable rate hikes arrive. You must choose between paying dramatically higher premiums, reducing benefits, or letting the policy lapse and losing all prior premium payments.
Restrictive underwriting requirements
The company automatically declines applicants using walkers, wheelchairs, or oxygen, and those with numerous chronic conditions, which means many people cannot qualify when they finally decide they need coverage. The consequence of waiting until health problems develop means facing certain denial, particularly after age 70 when 47% of applicants are rejected. The window for purchasing coverage closes much earlier than most people realize.
Limited family caregiver coverage
Policies do not pay benefits for care provided by family members unless they work for licensed agencies and provide care to other clients too, which forces families to hire outside caregivers to receive insurance benefits. The consequence of having your daughter provide daily care means receiving zero insurance benefits despite qualifying based on ADLs. You must pay professional agencies $25 to $35 per hour for care your family member could provide.
Slow claims processing
Consumer complaints frequently mention claims processing delays of two months or longer, with documents getting lost and multiple resubmissions required. The consequence of these delays means paying for care out-of-pocket for extended periods while waiting for approval, then struggling to get reimbursed. Families dealing with serious health crises face additional stress from the insensitive and slow claims process.
Medicare coordination restrictions
The policy cannot pay benefits for services Medicare already covers, which means no benefits during the first 100 days after a hospital stay when Medicare pays for skilled nursing care. The consequence of this coordination means your elimination period effectively extends longer if Medicare is paying for your care. You cannot use long-term care insurance to cover Medicare’s daily copayments of $217 after day 20.
Do’s and Don’ts When Buying Long-Term Care Insurance
Do’s and Don’ts Checklist
| Do These Things | Don’t Do These Things |
|---|---|
| Purchase coverage between ages 50-65 for best rates | Wait until health problems develop before applying |
| Choose automatic compound inflation to keep pace with costs | Buy too much coverage you cannot afford long-term |
| Review your policy every year for rate increase notices | Assume premiums stay level forever |
| Obtain multiple quotes from the six remaining carriers | Rely only on employer group policies |
| Keep detailed medical records for faster claims approval | Hide health conditions on your application |
Do purchase coverage between ages 50-65
Buying during this age range provides the optimal balance of affordable premiums and health qualification odds, because premiums rise 6-8% annually after age 60 while health conditions accumulate. The consequence of buying at 55 versus 65 means paying 40-50% lower annual premiums, and the consequence of waiting until 70 means facing premiums 200-300% higher than age 55 rates if you even qualify.
Do choose automatic compound inflation
Selecting compound inflation protection ensures your benefits keep pace with rising care costs over decades, because 3% compound inflation doubles your benefits in 24 years while simple inflation takes 33 years. The consequence of choosing no inflation protection means a $5,000 monthly benefit today buys only $2,500 worth of care in 25 years at 3% annual inflation, leaving huge coverage gaps when you finally need care.
Do review your policy annually
Reading your policy documents and checking for rate increase notices keeps you informed about coverage and costs, because insurance companies send important notices by mail that many people ignore or misfile. The consequence of not reviewing annual statements means missing notice of rate increases, benefit changes, or opportunities to add coverage at guaranteed issue rates, then facing surprises when you file a claim.
Do obtain multiple quotes
Comparing offers from at least three of the six remaining carriers ensures you get competitive pricing and favorable terms, because premiums for identical coverage can vary 30-50% between companies. The consequence of accepting the first quote means potentially paying $2,000 to $4,000 more annually for the same coverage, costing $60,000 to $120,000 over 30 years of premium payments.
Do keep detailed medical records
Maintaining organized documentation of your health conditions and doctor visits speeds the application and claims process, because underwriters review 10 years of medical history and claims adjusters require extensive documentation. The consequence of poor record-keeping means application delays of 8-12 weeks while the company requests records, and claims denials because you cannot prove you meet benefit triggers.
Don’t wait until health problems develop
Applying after diagnosis of chronic conditions like diabetes, heart disease, or arthritis results in declined applications or substandard ratings with doubled premiums. The consequence of waiting until age 72 after your stroke means automatic application denial, losing forever the opportunity to obtain coverage and leaving your family vulnerable to spending hundreds of thousands on care.
Don’t buy too much coverage
Purchasing maximum benefits you cannot afford long-term leads to policy lapses after paying premiums for years, because your budget cannot sustain 40-50% rate increases on policies that already stretched your finances. The consequence of buying $10,000 monthly benefits with 5% compound inflation means premiums reaching $12,000 to $15,000 annually, forcing you to drop the policy after 15 years and losing $180,000 in paid premiums with nothing to show.
Don’t assume premiums stay level
Expecting your initial premium to remain unchanged forever creates false security, because insurance companies reserve the right to increase premiums by class and have historically exercised this right aggressively. The consequence of budgeting only for initial premiums means financial crisis when rates jump 30-40%, forcing choices between paying increases, gutting benefits, or abandoning the policy after years of payments.
Don’t rely on employer group policies
Depending on employer-sponsored group long-term care coverage leaves you vulnerable because group policies often offer only limited inflation protection and disappear when you leave the employer. The consequence of relying solely on group coverage means losing your insurance when you retire at 65, then facing individual market rates triple what you paid for group coverage and potential denial due to health changes since you enrolled in the group plan.
Don’t hide health conditions
Concealing medical problems or medications on your application constitutes fraud and allows the company to rescind your policy when you file a claim. The consequence of omitting your diabetes diagnosis or COPD medication means the company investigates your medical history during claims review, discovers the concealment, cancels your policy, and returns only paid premiums while you face $100,000+ in care bills with no coverage.
Mistakes to Avoid When Buying and Using Long-Term Care Insurance
Application Mistakes
Incomplete Medical History: Failing to list all doctors seen in the past 10 years or all medications taken causes application delays and potential denial when the insurance company discovers omissions during their investigation. The consequence of forgetting to mention your dermatologist or podiatrist means the insurer questions your honesty and scrutinizes your entire application more harshly. They request medical records from every provider they discover through pharmacy records, adding weeks or months to underwriting.
Incorrect Height and Weight Information: Providing inaccurate measurements on the application results in rate changes or denial when the medical examiner measures you differently. The consequence of stating you weigh 180 pounds when you actually weigh 210 means falling into a different underwriting class with 40-60% higher premiums. Some weight levels automatically disqualify you from coverage entirely if you exceed maximum thresholds.
Assuming Family Care Qualifies: Expecting the policy to pay your spouse or children for providing care creates disappointment when you learn family members cannot receive benefits unless they work for licensed agencies. The consequence of planning to have your daughter provide care while collecting insurance benefits means facing zero reimbursement and needing to hire outside caregivers at $30-40 per hour to activate your policy benefits.
Coverage Selection Mistakes
Choosing Future Purchase Option Inflation: Selecting future purchase option instead of automatic compound inflation leaves gaps as you age because future purchase options require underwriting and many people cannot qualify later due to health changes. The consequence of this choice at age 55 means receiving offers every two years to increase benefits, but your diabetes diagnosis at age 62 means the company declines your purchase request and your benefits remain frozen at 1990s levels while care costs triple.
Buying Insufficient Elimination Period: Selecting a 30-day or 60-day elimination period dramatically increases premiums without significant benefit because most care needs last months or years, not weeks. The consequence of paying 40% higher premiums for a 30-day elimination period versus 90 days means spending an extra $40,000 in premiums over 30 years to save $9,000 during the elimination period, resulting in net loss of $31,000.
Overlooking Partnership Program: Failing to specifically request partnership-qualified policies means losing dollar-for-dollar asset protection that costs nothing extra. The consequence of buying a non-partnership policy in a state offering partnership programs means Medicaid estate recovery claims your entire estate after death instead of allowing your children to inherit assets equal to insurance benefits paid, potentially costing your family $200,000 to $500,000.
Claims Process Mistakes
Delaying Claims Filing: Waiting until the elimination period ends before notifying the insurance company causes processing delays because elimination period days only count after the company receives your claim form and determines you qualify. The consequence of waiting 90 days to file means your elimination period starts over from zero on the date you file, adding three more months of out-of-pocket costs you expected insurance to cover.
Inadequate ADL Documentation: Submitting claims without detailed daily care logs showing assistance with at least two ADLs leads to denials. The consequence of your doctor certifying you need help but you not maintaining written records of who helped you bathe, dress, and use the toilet each day means the company denies your claim for insufficient proof of hands-on assistance meeting policy definitions.
Using Unlicensed Care Providers: Hiring caregivers directly rather than through licensed home care agencies results in non-reimbursable expenses. The consequence of paying your neighbor $500 weekly to help you means zero insurance reimbursement because your neighbor lacks required licensure, background checks, and agency supervision that policies require. You must spend $1,200 weekly through licensed agencies to receive the $1,000 weekly your policy provides.
Understanding the Long-Term Care Insurance Claim Process
Filing a claim for long-term care insurance benefits involves multiple steps and strict documentation requirements. Understanding this process helps you avoid delays and denials when you or your family member needs care.
Step 1: Initial Claim Notification
You or your representative must contact Mutual of Omaha’s claims department as soon as you believe you qualify for benefits based on ADL impairment or cognitive decline. The company requires written notice within 90 days of when you first need care. The consequence of waiting six months to notify the company means your elimination period does not begin counting until they receive notice, potentially delaying benefits by half a year.
The claims representative assigns you a case number and mails a claim packet containing multiple forms. The packet includes a claimant statement form, benefit election form, physician’s certification form, and authorization to release medical records. The consequence of losing these forms means calling back for duplicates and adding weeks to the process when time is critical during a health crisis.
Step 2: Medical Assessment and Certification
A licensed health care professional must assess your condition and certify that you meet benefit triggers. Most policies require assessment by a registered nurse, licensed social worker, or physician. The consequence of having only your family doctor’s letter means potential denial if the letter lacks specific language about ADL limitations and expected duration.
The assessment evaluates whether you need substantial assistance with at least two ADLs or have severe cognitive impairment requiring substantial supervision. The assessor documents specific tasks you cannot perform and whether you need hands-on assistance or standby supervision. The consequence of the assessor noting you need prompting but not physical help means some policies deny benefits while Mutual of Omaha policies cover standby assistance.
Step 3: Plan of Care Submission
Your physician must complete and sign a Plan of Care detailing your diagnosis, prognosis, required care services, and frequency of care. The plan must specify whether you need skilled nursing services, personal care assistance, or both. The consequence of a vague plan stating “patient needs help at home” means claim denial until you submit a detailed plan specifying “patient needs hands-on assistance with bathing and dressing seven days per week.”
The Plan of Care must indicate that your condition is expected to last at least 90 days or be permanent. This 90-day certification requirement comes directly from HIPAA federal law. The consequence of your doctor noting your condition “may improve” without specifying a 90-day minimum duration means the insurance company denies the claim as not meeting tax-qualified policy requirements.
Step 4: Elimination Period Satisfaction
You must pay for care services yourself during the elimination period before insurance benefits begin. If you selected a 90-day elimination period, you pay all care costs for the first 90 days after the company approves your claim. The consequence of misunderstanding elimination periods means surprise out-of-pocket costs of $15,000 to $30,000 depending on your care needs.
Calendar day elimination periods count every day from claim approval to benefit start, whether you receive care or not. Service day elimination periods count only days you actually receive qualifying care services. The consequence of having a 90 service day elimination period when you only need care three days per week means the elimination period lasts 30 weeks instead of 90 days, requiring seven months of out-of-pocket payments.
Step 5: Benefit Payment and Ongoing Verification
After completing the elimination period, the insurance company begins paying monthly benefits either directly to service providers or reimbursing you for qualified expenses. You must submit monthly verification showing you continue to meet benefit triggers and documentation of care received. The consequence of failing to submit monthly care logs and invoices means benefit payments stop until you provide required documentation.
The company conducts periodic reassessments every six to twelve months to verify you still qualify for benefits. A nurse or social worker contacts your doctor and may visit your home. The consequence of these reassessments means you can lose benefits if your condition improves enough that you no longer need substantial assistance with two ADLs, even if you still need some help.
Federal and State Regulations Protecting Policyholders
Multiple layers of regulation govern long-term care insurance to protect consumers from unfair practices. Understanding these protections helps you recognize violations and take action when companies fail to follow the law.
HIPAA Consumer Protections
The Health Insurance Portability and Accountability Act requires guaranteed renewable policies that cannot be cancelled due to health changes or claims filed. The consequence of this protection means Mutual of Omaha cannot cancel your policy because you filed a claim or developed Alzheimer’s disease. They can only cancel if you stop paying premiums or if they exit the entire long-term care market in your state.
HIPAA prohibits policies from imposing new pre-existing condition exclusions after issue, which means conditions you develop after buying the policy must be covered. The consequence of this protection means if you buy a policy at 60 while healthy, then develop Parkinson’s disease at 68, the company must cover care related to Parkinson’s even though it began after policy purchase.
State Rate Increase Approval Requirements
State insurance departments must approve all premium increases before companies implement them. The company must prove to regulators that increases are necessary to pay future claims and maintain adequate reserves. The consequence of this oversight means some states reject or reduce requested increases, though approval remains more common than denial.
Insurance commissioners can order companies to offer nonforfeiture benefits or contingent nonforfeiture benefits on policies experiencing large rate increases. The consequence of this protection means if Mutual of Omaha increases your premiums by more than certain state thresholds, they must offer you the option to reduce benefits to maintain affordable premiums rather than forcing you to accept the full increase or lapse the policy.
NAIC Model Act Provisions
The National Association of Insurance Commissioners developed model regulations that most states have adopted. These include required outline of coverage documents explaining benefits in plain language, 30-day free look periods allowing cancellation for full refund, and prohibitions against post-claims underwriting. The consequence of these protections means you receive standardized disclosure documents before purchase and can cancel within 30 days if you change your mind for any reason.
The model regulations require companies to offer inflation protection and clearly disclose the consequences of declining inflation coverage. They must show side-by-side comparisons of premiums and benefits with and without inflation. The consequence of this requirement means you receive specific illustrations showing that declining inflation protection saves $2,000 annually in premiums but costs you $200,000 in reduced benefits when you need care in 25 years.
Partnership Program Requirements
States operating partnership programs must obtain federal approval and follow specific guidelines. Policies must include dollar-for-dollar asset protection, compound inflation for buyers under age 61, and total benefit amounts of at least $100,000. The consequence of these requirements means partnership policies provide stronger consumer protection than non-partnership policies because states impose additional oversight.
Partnership programs require companies to provide annual benefit statements showing how inflation has increased your coverage and how much asset protection you have accumulated. The consequence of this reporting requirement means you receive annual reminders of your coverage amount and can verify the company is properly crediting inflation increases to your benefits.
When Long-Term Care Insurance Makes Sense
Deciding whether to purchase Mutual of Omaha long-term care insurance depends on your specific financial situation, health status, family circumstances, and risk tolerance. Several factors indicate when insurance provides value versus when alternatives work better.
Ideal Candidates for Coverage
People with $200,000 to $2 million in assets benefit most from long-term care insurance because they have enough wealth to protect but not enough to easily absorb $300,000 to $500,000 in care costs. The consequence of having $400,000 in retirement savings with no insurance means a five-year nursing home stay costing $550,000 depletes your entire savings and forces Medicaid dependence. Insurance costing $40,000 in premiums over 20 years preserves your $400,000 for your spouse and heirs.
Married couples where one spouse is likely to survive the other gain significant value from coverage. The consequence of the first spouse needing five years of care without insurance means spending $500,000 from joint assets, leaving the surviving spouse with inadequate resources for the remaining 10-15 years of life. Insurance protecting those assets ensures the surviving spouse maintains financial security.
Individuals with family history of conditions requiring prolonged care, such as Alzheimer’s disease, Parkinson’s disease, or stroke, face higher risks of needing expensive long-term care. The consequence of having both parents and a sibling develop dementia means your risk exceeds 50%, making insurance premiums a reasonable hedge against likely future costs. However, family history of Alzheimer’s with two or more immediate relatives means Mutual of Omaha declines coverage.
When Insurance Provides Less Value
People with less than $100,000 in assets typically qualify for Medicaid relatively quickly without extensive spend down. The consequence of owning only $75,000 in assets means you become Medicaid-eligible after spending just $73,000 on care, which might occur within one year. Insurance premiums of $4,000 annually for 20 years total $80,000, more than your total assets, making self-paying until Medicaid eligibility more practical.
Individuals with more than $3 million in liquid assets can usually self-insure without risking financial security. The consequence of having $5 million in investments means a $400,000 care episode consumes only 8% of your wealth, leaving $4.6 million intact. Insurance premiums of $100,000 over 25 years provide less value than simply budgeting care costs from investment returns.
People in poor health or over age 75 typically face premiums so high that insurance provides marginal value. The consequence of applying at age 77 means annual premiums of $12,000 to $18,000, totaling $120,000 to $180,000 if you pay for 10 years before needing care. Self-paying for care and protecting remaining assets through Medicaid planning often costs less.
The Role of Other Resources
People with substantial home equity but limited liquid assets should consider reverse mortgages before buying insurance. The consequence of owning a $500,000 home with only $150,000 in savings means you can access $200,000 through reverse mortgage rather than paying $60,000 in insurance premiums over 15 years. The reverse mortgage preserves cash for living expenses while providing care funding if needed.
Individuals eligible for veterans benefits through the Aid and Attendance program may need less insurance coverage because these benefits pay up to $2,400 monthly for care. The consequence of qualifying as a wartime veteran needing ADL assistance means receiving $28,800 annually in tax-free benefits, reducing the insurance coverage amount you need to purchase and lowering premiums by 30-40%.
People with adult children willing and able to provide care save significantly on care costs but may still want insurance for quality and choice reasons. The consequence of having three adult children ready to provide care means lower out-of-pocket costs, but insurance allows hiring professional caregivers and gives children the option to remain children rather than caregivers if circumstances make family care too difficult.
Frequently Asked Questions
Can I deduct long-term care insurance premiums on my taxes?
Yes, but only if you itemize deductions and your total medical expenses exceed 7.5% of adjusted gross income. Qualified policy premiums count as medical expenses up to age-based limits.
Does Medicare pay for long-term care?
No, Medicare only covers short-term skilled nursing care (maximum 100 days) following hospitalization. It does not cover custodial care or chronic long-term services.
What happens if Mutual of Omaha goes out of business?
No, your coverage would not disappear. State insurance guarantee associations protect policyholders, though coverage limits typically cap at $300,000 to $500,000 in benefits depending on your state.
Can I buy long-term care insurance for my parents?
Yes, but they must apply, undergo medical underwriting, and qualify based on their health. You can pay premiums, but they must own the policy and complete the application.
Will pre-existing conditions prevent me from getting coverage?
Yes, most pre-existing conditions like diabetes, heart disease, strokes, or dementia result in automatic application denial. Insurance companies use medical underwriting to exclude high-risk applicants.
Can I cancel my policy and get my money back?
No, long-term care insurance does not build cash value. If you cancel, you lose all premiums paid unless your policy includes a return-of-premium rider purchased at additional cost.
How long does it take to get approved?
Four to eight weeks, though approval typically takes this timeframe. The company orders medical records, conducts phone interviews, and may require medical examinations before making underwriting decisions.
Do benefits increase automatically every year?
No, only if you purchased optional inflation protection. Without this rider, your monthly benefit amount stays fixed at the original level throughout the policy life.
Can I use my benefits for family members to care for me?
No, policies require licensed care providers or agencies. Family members cannot receive payment unless they work for licensed agencies and provide care to other clients besides you.
Does the policy cover care in other countries?
Yes, Mutual of Omaha policies provide international coverage for up to 12 months. Care must meet policy requirements for qualified services and facility licensing standards.
What happens if I miss a premium payment?
No loss immediately, you have 31-day grace period. If premiums remain unpaid after 31 days, coverage lapses unless you have nonforfeiture provisions protecting some benefits.
Can I reduce my benefits to lower my premiums?
Not usually, unless company offers during rate increase. Otherwise, you cannot unilaterally reduce benefits on existing policy to lower premiums without reapplication.
Do I need a doctor’s referral to file a claim?
Yes, policies require physician certification that you meet benefit triggers. Your doctor must certify you need assistance with at least two ADLs or have severe cognitive impairment.
Will my policy pay for adult day care?
Yes, both Mutual of Omaha policy types cover adult day care services provided by licensed facilities. Benefits pay at same percentage as nursing home and home care.
Can I buy more coverage after I already have a policy?
No, you cannot add benefits to existing policy. You would need to apply for new policy and undergo medical underwriting again based on your current health.
What is the maximum age to buy long-term care insurance?
Usually 75-80, though most insurers set maximum issue ages around this range. Mutual of Omaha typically stops accepting new applications around age 80, though exact limits vary by state.
Does long-term care insurance cover Alzheimer’s disease?
Yes, policies cover care needed due to Alzheimer’s if you meet benefit triggers. You must require substantial supervision due to severe cognitive impairment or need assistance with ADLs.
Can the insurance company cancel my policy if I file a claim?
No, federal law requires guaranteed renewable policies. Companies cannot cancel coverage due to health changes or claims filed. They can only cancel for non-payment of premiums.
Will my policy pay for assisted living facilities?
Yes, Mutual of Omaha covers assisted living at same benefit level as nursing homes. The facility must be licensed and you must meet policy benefit triggers.
How do I prove I need assistance with Activities of Daily Living?
With medical assessments, you need medical assessments documenting ADL limitations. Keep detailed daily care logs showing who helped you with which activities and maintain physician certification of need.
Related reading
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