Long Term Care Information

10. What provisions are included in long term care policies?

Provisions That Affect the Annual Premium

• Benefit Period

A policy should provide sufficient coverage for a long stay, usually with minimum coverage of 3 to 4 years. With a lifetime benefit period there would be no limit on the time period over which benefits are paid. The longer the benefit period, the higher the premium.

• Daily Benefit Amount

An adequate daily benefit should be selected so that assets do not have to be invaded to pay for long term care. Our guideline for a daily benefit amount is 80% of the prevailing nursing home cost in your area. Generally, we are recommending a minimum of $130 day. The amount you choose may vary based on the amount of income you otherwise have available to pay for long term care expenses. The higher the daily benefit amount selected, the higher the premium.

• Home Health Care

Most people prefer to receive care at home for the longest possible time. Proper home health care coverage can delay or even eliminate the need, in some situations, for nursing home care. The amount of the daily benefit and the length of the benefit period selected for home health care affect the premium. Most policies integrate home health care into the core policy, and you can choose a home health care benefit that is 50% or 100% of the nursing home benefit. For some policies, home health care coverage is available through a rider to the policy. Adult day care is generally included as part of home health care coverage. Assisted living, which generally involves a less intensive level of care than what is provided in a nursing borne, may be a part of either the nursing home or home health care provisions depending upon the policy.

• Inflation Protection

It is important that policy benefits keep pace with increasing nursing home and home health care costs. To protect against inflation, you may want to purchase a policy that includes an automatic inflation provision where premiums stay level while your daily benefit increases at 5% each year. At Sandy Silverman Insurance Services we usually recommend this additional protection to those 75 years of age and younger. For those over 75, depending upon the insurance company selected, it may be more cost effective to choose a higher daily benefit without the inflation protection option. Be cautious about policies offering inflation protection by permitting you to buy additional coverage every one, two or three years. By the time you reach the point when you require care, the premiums for this additional coverage may have risen to the point where they are no longer affordable.

• Elimination Period (Deductible or Waiting Period)

The elimination period choices vary from one policy to the next-generally from 0 days to 180 days in Florida. The longer the elimination period you choose, the lower the premium will be. The following is an example of how the elimination period works. If you were to choose elimination period of 20 days, for the first 20 days you would receive no benefits and would have to pay the nursing home costs from other resources. On the 2lst day the insurance company would start paying the cost of your care up to the daily benefit amount you selected.
 

Essential Factors In A Good Long Term Care Policy

• Financially Stable Company

It is important to choose an insurance company that will be paying benefits when you need them. A.M. Best, Duff & Phelps, Standard and Poor's, Moody's, and Weiss Research are companies which specialize in evaluating the financial condition of life and health insurance companies. While no one can provide any guarantees, we recommend that you choose an insurance company that has recently received high ratings from at least two of the above rating services.

• Guaranteed Renewable

As long as the premium is paid on time, with a "guaranteed renewable" policy, the insurance company must renew the policy annually, even if the client's health has deteriorated. Premiums will generally remain at the level stated in your policy for the life of the policy and can change only if the state insurance commissioner approves the change for everyone who has the same policy in your state.

• No Prior Hospital Stay is Required

Unlike Medicare, you do not need a prior hospitalization to be eligible for benefits. This is particularly important since only half the people entering nursing homes have received care first in a hospital. Rather, many people are admitted to a long term care facility following a period of care at home.

• Well Defined Benefit Triggers

There are 2 ways to qualify for benefits:

Activities of daily living - your physician certifies that you require help with activities such as eating, bathing, dressing, mobility, toileting or continence.

Access to policy benefits is based on your inability to perform at least 2 or more activities of daily living.

Cognitive impairment - you physically may be able to perform the activities of daily living but need 10 be reminded to do so because of organically based dementia such as Alzheimer’s.