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Incorporating Short-Term Care Insurance into a Client's Financial Plan
Guest Expert: Madolyn Reynolds, CLTC, Krause & Associates
Date:
Attendee's Excellent Rating: 90%
Webinar Replay Description

Click Here to Download Summary Below

 

🔍 What is Short-Term Care Insurance?

Short-Term Care Insurance (STCI) is a health insurance product designed to cover temporary care needs for up to 365 days, including in-home care, assisted living, or skilled nursing. It serves as an affordable, accessible alternative to Long-Term Care Insurance (LTCI), especially for clients who:

  • Are between ages 65–75, though eligibility extends up to age 89

  • Want to cover gaps before Medicare eligibility

  • Need coverage immediately due to a zero-day elimination period

đź§  Key Triggers for STCI Benefits:

  • Inability to perform 2 out of 6 activities of daily living (ADLs) or

  • Diagnosis of a cognitive impairment

Activities of Daily Living include: bathing, dressing, eating, toileting, transferring, and continence.

👉 Source for ADLs definition: Medicare.gov - Long-term care


đź’ˇ Advantages Over Long-Term Care Insurance

1. Immediate Coverage:

STCI can offer a zero-day elimination period, which contrasts sharply with LTCI’s standard 90- or 180-day wait.

This makes STCI ideal for events like hip or knee replacements, accidents, or sudden hospitalizations.

2. Lower Premiums:

Premiums are significantly lower due to shorter coverage periods and simplified underwriting.

  • Sample rates for a $100/day benefit for 365 days:

    • Age 60: ~$37/month

    • Age 75: ~$135/month

Compare LTCI average premiums here: AALTCI Cost Guide

3. Simplified Underwriting:

  • No lab tests or full exams—only knockout questions

  • Clients with semi-managed chronic conditions (like controlled high blood pressure or statin use) may still qualify

  • If previously declined for LTCI, STCI may still be an option


🔄 Restoration of Benefits

STCI often includes Restoration of Benefits. If a client goes off claim and remains healthy for 180 days, their benefits reset. This allows:

  • Multiple uses of the policy for separate events

  • Extended value over time

This feature is uncommon in traditional LTCI policies.


đź’Ľ When to Use STCI in Planning

1. Filling Gaps Before Medicare:

For clients aged 62–65 who are on COBRA or uninsured, STCI helps cover health needs during this vulnerable period.

2. Supplementing Medicare Advantage:

STCI can cover:

  • Skilled nursing co-pays

  • Hospital co-pays

  • Additional needs like home modifications, caregiving, or meals

đź“– Medicare's coverage limits for skilled nursing:
Medicare.gov - Skilled nursing facility care

3. Bridging LTCI Elimination Periods:

Clients with LTCI that has long elimination periods (e.g., 180 days) can pair STCI to cover that gap cost-effectively.

4. Alternative for Declined LTCI Applicants:

Due to lighter underwriting, STCI offers coverage when LTCI is not an option.


âť“ Key Conversation Starters for Clients

Advisors can open discussions using:

  • “What is your plan if your health changes in 5, 10, or 15 years?”

  • “Do you want your children to be caregivers or care managers?”

  • “Do you know how much a year of home care or memory care costs?”

📊 Average annual care costs in the U.S.:


🛑 Limitations and Considerations

  • Not available in every state (e.g., CA, NY, FL, MN, NJ, MA, WA, VT)

  • Premiums not guaranteed—though there have been no rate increases to date

  • Individual policies only—no shared spousal pool like in some hybrid LTCI policies

If clients reside in restricted states but have a second home elsewhere, they may still qualify under the second home’s jurisdiction.


đź”— Additional Resources


🎯 Advisor Takeaways

  1. STCI is a practical tool to bridge gaps in care coverage, especially for clients who are unprepared or priced out of LTCI.

  2. Use STCI creatively—pair it with Medicare, long-term care, or as standalone protection.

  3. Bring in STCI early—have these conversations before a health crisis forces a reactive decision.

  4. Educate clients on the real cost of care and offer choices that align with their independence and family dynamics.

Attendees Comments:

A few comments from listeners when they were asked what the learned from the webinar:

Had not heard of this product before - already have a couple of clients in mind!
- Randi B.

Old topic, excellent review especially in light of cuts to the Marketplace.
- Warren W.

I was not familiar with this product. Speaker was excellent, very thorough and clear.
- Heidi D.

missy@financia…

Fri, 07/25/2025 - 10:22

Comments
A few comments from listeners when they were asked what the learned from the webinar:

Had not heard of this product before - already have a couple of clients in mind!
- Randi B.

Old topic, excellent review especially in light of cuts to the Marketplace.
- Warren W.

I was not familiar with this product. Speaker was excellent, very thorough and clear.
- Heidi D.
Incorporating Short-Term Care Insurance into a Client's Financial Plan 07-24-2025