Long Term Care Insurance
Defining Long Term care…
Long Term Care simply means you are going to need some sort of help or assistance for a period of 90 days or longer.
There’s no doubt that as we age the odds of needing care increase.
But today's Long Term Care coverage means much more than "Nursing Home insurance.
The best policies are comprehensive and very flexible.
It doesn't matter if you are 94 suffering from dementia or like Christopher Reeves (Superman) who unfortunately fell off his horse at 40 and needed care until the day he died.A traditional Long Term Care Insurance Policy.
For our clients, Long Term Care planning is geared to keep you in your own home. But it will also cover things like:
• Assisted Living
• Continuing Care Retirement Communities
• Care Coordination Services
• Home Modification
• Adult Day Care
Most importantly for our clients, Long Term Care planning gives you the choice to remain independent in your own home.
However, if you determine that it is necessary a Skilled Nursing Home care will be covered as well.
Traditional Long Term Care insurance
Traditional Long Term Care insurance coverage has been around for more than 40 years. The traditional types of policies typically offer the most affordable coverage for funding long term care expenses.
Traditional policy benefits are paid using reimbursement, in which the actual cost of care are submitted to the insurer (up to policy limits) when insured requires assistance with two of six activities of daily living or because of cognitive impairment, including Alzheimer’s disease.
Qualifying for A Claim:
The six ADLs are generally recognized as:
1. Bathing. The ability to clean oneself and perform grooming activities like shaving and brushing teeth.
2. Dressing. The ability to get dressed by oneself without struggling with buttons and zippers.
3. Eating. The ability to feed oneself.
4. Transferring. Being able to either walk or move oneself from a bed to a wheelchair and back again.
5. Toileting. The ability to get on and off the toilet.
6. Continence. The ability to control one's bladder and bowel functions.
Benefit “triggers” are what carriers (insurance companies) use to qualifying a claim for coverage. The triggers may be based on
inability to perform two or more of the six ADLs previously listed,
Cognitive Impairment (like Dementia, Alzheimer’s or
a doctor acknowledging that care is necessary.
When buying a policies make sure you clearly understand what triggers are included in the plan as well as the exact definition of each one. A care coordinator or a physician determines the plan of care and when benefits go into effect, usually after the policy’s waiting period.
In a Traditional stand-alone policy you select the benefits you want at the outset and the policy is custom-tailored to suit your needs.
4 Key Components to a Traditional Long Term Care plans include:
A Monthly Benefit (monthly dollar benefit covered). – Benefits range from $1,500 to $12,000/month, depending on the insurance carrier. (Individual or Shared)
A Benefit Period (The number of Years you will receive benefits) – Benefit periods range from 2 to 6 years, again depending on the carrier. A few carriers offer longer benefit periods.
An Elimination Period (the number of days after a long term care event before you start receiving benefits) – These range from (0 Day, but more common are 30 Days - 180 days).
An Inflation Protection rider, which increases benefits over time to keep pace with the cost of living. (2%, 3%, 4%, 5% simple or Compound)
What’s New about today’s Traditional Long Term Care Policies?
In recent years to maintain competitiveness “New” traditional long-term care insurance programs have been vastly improved. Most notably by greatly reducing the chances for premium increases.
Unlike hybrids, traditional insurance premiums are relatively low - you can get more bang for your buck. However, if you never need long term care, your premiums are not returned.
What is the difference between your Health Insurance and Long Term Care insurance?
Unlike traditional health insurance, long-term care insurance is designed to cover long-term services and supports, including personal and custodial care in a variety of settings such as your
Up to and including a Skilled Nursing or facility.
How are Long Term Care Premiums determined?
The cost of your long-term care policy is based on:
Your Age when you buy the policy
The Daily / Monthly benefit amount you select
Benefit Period- the of days (years) that a policy will pay
The (maximum benefit amount per day X the number of days) = determines the lifetime maximum amount that the policy will pay.
Optional benefits you choose, such as Inflation Protection
This makes traditional long term care insurance generally one of the most efficient ways to get the most coverage for your premium paid. Typically, you pay an annual premium for life, although your premium payment period could be shorter.
Your premium is guaranteed renewable. Premiums are typically paid on a monthly, quarterly, semi-annual or annual basis. As long as you pay your premium, you will have coverage in-force. Long term care insurance policies are similar to your auto insurance, homeowners insurance, and health insurance.
If you cancel your policy or end up not using long term care services, typically you will not receive refunds of your premium or any cash value.
These plans do not typically have a return of premium feature unless you purchase a death benefit rider. Hence, premiums are much more affordable on traditional long term care insurance policies.
As with your auto or homeowners insurance, if you do not make a claim on your policy you will not receive any benefits.
Because this traditional insurance utilizes a "pay-as-you-go" approach your premium is typically affordable and attainable.
Underwriting Barriers to Qualify for a Traditional Long Term Care Policy
If you are in poor health or already receiving long-term care services, you may not qualify for long-term care insurance as most individual policies require medical underwriting. In some cases, you may be able to buy a limited amount of coverage, or coverage at a higher “non-standard” rate.
A possible exception to the rule are Group Long Term Care policies, generally acquired through an employer or other affiliated organization do not require underwriting.