If you retire abroad, will your long-term care insurance go with you?

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Many baby boomers dream of retiring abroad where the (cost of) livin’ is easy. In fact, the number of Social Security recipients already living that retirement dream outside the U.S. increased 50 percent from 2003 to 2013, and shows little sign of slowing.

But if you decide to retire abroad, will your long-term care insurance leave the country with you?

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“It’s no problem taking your LTC policy; once you buy the policy, it remains in effect as long as you pay the premiums,” says Jesse Slome, executive director of the Los Angeles-based American Association for Long-Term Care Insurance. “The question is: Will it pay benefits outside the country when you need it?”


The odds are against policy portability

Private long-term care insurance is something of an American product, given that much of the world folds long-term care benefits into government-provided universal health coverage. The absence of American-style private insurance systems abroad makes overseas long-term care coverage impractical for many insurers.

“For the most part, (the policies) don’t give you cash — they pay a provider,” explains Judy Feder, a professor of public policy at Georgetown University. “So if an insurer doesn’t offer benefits overseas, it’s likely that they don’t have a network that would enable them to justify payment to a provider.”

Slome adds that the infrastructure disconnect presents an additional problem for LTC insurers.

“It increases the risk of fraud,” he says. “You can’t just hire a neighbor there to provide the care that you’d need a licensed professional for in America.”

What does your policy say?

Still, some policies do provide coverage outside the U.S. But it can take some digging to discover whether your policy includes, excludes or limits benefits abroad, according to Scott Olson, founder of LTCShop.com, a California-based long-term care insurance brokerage firm.

“First, look in the table of contents for the ‘Exclusions and Limitations’ section, which is usually located near the back of the policy. That will list the policy limits that apply outside of the U.S.,” he says. “It may direct you on to an international benefits section for more details.”

Do the policies vary much on payments abroad? Olson chuckles. “There are almost as many variations to this as there are long-term care insurance companies!” he says.

International coverage is all over the map

Here’s how Olson breaks down the overseas coverage of LTC policies, from best to worst:

  • The best range from paying 100 percent of the policy benefits anywhere in the world, on down to policies providing 50 percent of the daily benefit amount outside the U.S.
  • The next might limit payment abroad to 10 times the daily benefit per month, or pay 100 percent of benefits for one year with the remaining benefits payable only in the U.S., or provide 50 percent of the usual benefits for one year of home care abroad.
  • The rest pay reduced benefits beyond U.S. borders (such as 50 percent for nursing home care and 25 percent for home care) for no more than four years, or limit total benefits abroad to between 30 and 100 times the policy’s daily benefit, or provide no benefits whatsoever outside the U.S., its territories and possessions.

“In addition, some policies pay full benefits in the U.S., Canada and the U.K., some just in the U.S. and Canada, and some won’t pay benefits at all in countries where U.S. sanctions prohibit payment,” Olson says.

Working with what you’ve got

Even if you find that your policy doesn’t measure up to your expat-tations, Slome cautions against simply dropping it — until you’ve considered your options.

“You need to factor in whether or not you would come back (to the U.S.) to get the care you need,” he says.

“If your plan covers a year of care abroad and then you have to make a decision whether to come back or not, maybe you can live with that,” he says. “But my advice would be, don’t drop it immediately, because you may go abroad for a year, find that it’s not what you anticipated, and now you can’t reapply because you probably won’t be healthy enough.”

If you decide to retire abroad, why not just purchase a policy when you get there?

“That’s probably not going to be viable,” Olson says. “Our country has the most robust LTC insurance market in the world, so that’s not going to be the answer.”

Shop around — and rethink coverage

If you’re between ages 55 and 70, when the cost of a long-term care policy is still affordable, Slome suggests working with an LTC specialist or lawyer to find a new policy that better fits your expat dream. But be sure to hold on to your current policy until your new insurer accepts your application and premium payment. And don’t move abroad too soon, because you’ll need U.S. residency to apply for a different policy if the new one falls through.

Slome says there’s one final option that many expats have chosen with success: Simply drop long-term care coverage altogether. In fact, it’s often one of the reasons they chose to expatriate.

“If you’re moving out of the country to have a great lifestyle and make your dollars go a lot further, one of the things you’re going to benefit from is an ample supply of affordable labor,” he says. “You may be able to find somebody to provide care in your home for $8,000 a year as opposed to $45,000 a year in the U.S. At that point, you don’t need long-term care insurance.”