Navigating the complexities of long-term care insurance (LTCI) can be tough. There is a gap between purchase and claims plus family is often filing on behalf of a loved one. Making it worse, every policy is different.
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What does your policy cover?
Some policies only cover nursing homes and/or assisted living facilities. Others include home care, adult day care, respite care, and may even provide for care coordination, telemonitoring, and home modifications. If your policy allows for an alternate plan of care, it may be able to cover services not specifically listed.
How do you qualify for benefits?
Most policies require “substantial assistance” or “substantial supervision.” In other words, you must need substantial assistance from another person to perform certain activities of daily living, such as bathing and dressing, or need substantial supervision to help ensure your safety due to a cognitive impairment.
What are your daily benefit and total benefits?
Traditionally, policies have a max amount they will pay for any one day of care and a max amount they will pay, in total, under the policy. This is typically shown as the daily benefit multiplied by the number of days the policy will cover. If you have other benefits, such as home modification or bed reservation, these costs also come out of the policy maximum.
Do you have an inflation rider?
Inflation riders raise your daily benefit every year. The most common is compound where your benefit increases by a set percent on top of the previous year. Simple inflation riders, on the other hand, increase your benefit by a set amount each year. If you have an inflation rider, you could have a substantially larger benefit than you realize.
Do you have a pool of money?
Some policies only cover a set number of days, period. Most policies, however, have a total benefit they will pay out and, if you don’t exceed the daily benefit, aren’t concerned with how many total days you receive care. If you use less care per day, you can sometimes double or triple the length of your policy.
What is your elimination period?
Most policies include an “elimination period” before the insurance company begins to pay for benefits. It represents the number of days you will have to pay out of pocket, so most people think of this as a deductible.
Some policies have differing elimination periods depending on the type of care. Some policies will count days even if care was paid for by health insurance. These aren’t small variances. Care plans that account for elimination periods sometimes save thousands of dollars.
Do you have a waiver of premium?
If you have a waiver of premium and are receiving the right kind of benefits, you may be able to stop paying premiums while receiving care. Don’t forget to add the premium savings back into your budget when planning.
Other Issues:
Policies can count days differently. They can require different provider licenses. Some penalize gaps in care or have multiple elimination periods. Some have survivorship and spousal care. Others require clinical tests. They can pay benefits like annuities or only reimburse you for care.
To maximize your benefits, have someone with LTCI experience review your policy and help you with the claims process.