Long term care insurance can serve as a great way to supplement the cost of long term care. There are policies that will provide coverage for in-home care, care provided in assisted living communities or adult foster care communities, and in skilled nursing homes.
More and more, clients are seeking a review of their policy when a loved one attempts to obtain their insurance benefit but are denied coverage from the insurance company. Often, the policy holder believed that if they ever needed care, the policy would cover their needs. However, when they seek coverage, they find that there are many things that they didn’t know about their specific policy that preclude immediate coverage or any coverage.
Ask questions when purchasing a long term care policy
Many times the problem could have been avoided if the client knew the questions to ask when they were purchasing the policy.
1. How long is the elimination period?
The what? Most long term care policies have an elimination period. An elimination period is the time that the person needing care must pay, out of their pocket, for said care before the insurance company will pay. For example, many policies have a 90-day elimination period for skilled nursing care. This means that a person must be residing in a nursing home and privately paying for the care for 90 days before the insurance policy will pay. Most skilled nursing homes charge upwards of $330/day, or $10,000 (or more) per month. Effectively, the policy holder must pay $30,000 of their own money for nursing home care before the insurance policy will provide coverage. Many clients, when this time comes, do not have an extra $30,000 to pay for nursing home care in order to satisfy the elimination period.
2. What type of care is covered? In-home? Assisted living? Skilled nursing?
Recently, I spoke with a policy holder who was shocked to learn that her policy for “home and community based coverage” would not cover care in the case where the policy owner was living in an assisted living community and desired to bring in a private caregiver. The policy owner thought the care would be covered because her “home” was in the assisted living community. The insurance company denied coverage citing the policy which did exclude paying for a private company to provide care in the assisted living community. Unfortunately for this policy holder, the policy was not comprehensive and did not provide any coverage for assisted living and skilled nursing care.
3. What is required for an assisted living to be covered?
Often assisted living coverage requires that the facility provide care to more than a certain number of persons. This requirement eliminates some smaller adult foster care communities. Some policies require that a registered nurse is on staff at all times, and not an LPN, for example. One policy excluded “homes for the aged” which could exclude rest homes or places that primarily provides domiciliary residency or retirement care.
Given the vague terms of some policies, like the above, it is important to contact the policy provider before moving to a facility to confirm that the policy would provide coverage in the desired assisted living community.
4. How does the insurance company decide if the insured needs care?
Each policy will provide the manner in which it is determined whether or not a person meets the criteria for coverage. Generally, a person must be evaluated by a licensed health care practitioner who would certify that the person is “chronically ill.” Chronically ill is often defined as being functionally incapacitated for a period that is expected to last for a certain amount of time - more than 90 days, for example. Chronically ill could also mean having severe cognitive impairment.
Many policies define functionally incapacitated as being unable to perform two or more activities of daily living without assistance. Generally, the activities of daily living include:
- bathing
- continence
- dressing
- eating (actually getting food from the table into one's mouth)
- toileting
- transferring in and out of a bed, chair, or wheelchair
You should be familiar with the policy’s requirements for triggering care and who makes the decision. Note that the insurance company may review medical records and a care plan established by the facility. Therefore, it is important that the insured, or their representative participate in doctor’s appointments and care meetings to make sure that the records accurately reflect a policy owners needs to support a claim for their care.
5. How long will coverage last and how much will the policy pay?
Most policies have a daily rate that they will pay. If the policy covers in-home care, assisted living and skilled nursing care, the daily rates will be different for each living situation. Some policies will have a lifetime maximum benefit, meaning that once you reach this limit, the policy will no longer pay for care.
One strategy is to access the policy for in-home care. Sometimes, having in-home care allows a person to stay at home longer. The in-home care is also not as draining on a policy with a lifetime maximum limit as using the policy for only nursing home care.
6. Does the policy contain an inflation rider?
The inflation rider will increase the daily reimbursement amounts and maximum lifetime coverage. There is generally an extra cost for the inflation rider. However, the increase in monthly premium may be worth the extra coverage benefit.
Know what you are buying
The most important thing to do when purchasing a long term care insurance policy is to ask questions so that you fully understand the financial benefit under different care scenarios. Don’t settle for general statements about coverage - a policy should be reviewed prior to being purchased. It is a great investment to have a Warner attorney review the policy with you so that you understand when a policy will provide coverage, how much the policy will cover, and in what circumstances you will have coverage.
