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Retiring abroad? Here's what happens to your long-term care insurance when you move

Learn about long-term care insuranceThinking about retiring overseas for better weather or lower cost of living? You may want to rethink your plans if you are planning on buying long-term care insurance and are counting on it should you ever need assistance while you are living abroad in your old age.

Jesse Slome, executive director of the American Association of Long-Term Care Insurance, an industry group, says long-term care policies vary as do their payouts when policyholders move outside the U.S. "If you're staying within the United States, it's not a big deal," he says. "But if you're going abroad, you may discover that your policy will pay very limited benefits or for a very limited time or might not pay any benefits if you are in any country other than the United States or Canada."

The language in your policy dictates how your benefits are paid no matter where you live, Slome says. That's why, if you're thinking of living abroad, it's extremely important to discuss your options with a knowledgeable long-term care specialist before buying, he says.

When you bought could be a factor

Medicare won't cross the border with you when you move. Still, more Americans are looking to retire outside the U.S. According to Live and Invest Overseas, some 1.4 million Americans have retired are living overseas. And according to the Social Security Administration, the number of Americans whose Social Security checks must be mailed to them in a foreign country is on the rise: up 8 percent from 2011 to 2013. Slome says his trade group fields inquiries all the time from retirees who want to know what happens should they move abroad after buying long-term care insurance. The number of inquiries doesn't surprise him. "We know that many people have second houses in other countries and that people are pretty mobile so who can predict the future?" Slome says.

Mitch Abrams, managing partner with Homewatch CareGivers based in Chicago, says that if you bought your policy more than a decade ago, you may not have as much to worry about. Older policies, he says, were more lenient when it came to policyholders moving overseas. You still can get policies that will provide some coverage overseas. However, Abrams says, many of the policies issued today impose strict limitations on those benefits when you need care and you're not in the U.S. or its territories.

Where you move also could be important

Some policies today also require that the care you receive be delivered by a licensing agency, Abrams says. You could move to a country where those providing care aren't licensed and therefore you wouldn't be able to realize your benefits. Not only do you have to pick your policy carefully as you review long-term care quotes, Abrams says, but you also have to be careful where you choose to live when you retire.

Among the long-term care policies its members offer are those with these options, Slome says:

  • A policy that provides 100 percent of the daily benefit worldwide or maximum benefit for up to one year.
  • A policy that has no exclusions for benefits paid to those living overseas.
  • A policy that provides full benefits if you move to Canada, but not to any other country.
  • A policy that pays 100 percent of the monthly benefit for facility care outside the U.S. or 50 percent of the monthly benefit for home and community care for up to one year.
  • A policy that provides one-half or 50 percent of the daily benefit amount when living outside the U.S. The maximum amount payable is 1,825 times your lifetime benefit period.

Do your homework on exclusions, benefits

The best way to determine how much coverage you would be entitled to and for how long is to look at the exclusions listed on the policy. Under exclusions, it may state that international benefits are excluded or it may have a separate section on "international benefits" or on coverage outside of the country.

If you decide to move overseas after you buy a long-term care policy, you may want to discuss reducing the level of benefits you are paying for with your agent. If you return to the U.S. and haven't used all your benefits, you may be entitled to the balance when you do, Slome says.

Get long-term care quotes for a plan that meets your likely plans

With all the options and policies available, Slome says, the bottom line is that if you are thinking of retiring outside the U.S., you need to work with a specialist so that the language in your policy fits your potential needs. If you're planning to stay overseas permanently, long-term care insurance that is limited to four years or less may not be useful to you. Also, look for a plan that pays full benefits overseas if you're planning a permanent move abroad. Remember though such plans are likely to carry much higher premiums.

Note: The payouts will be in U.S. dollars, which could be a plus or a minus, depending on the economy of the country where you're living.

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