Long-Term Care Insurance Terms and Options
Long-term care insurance policies generally cover care given atall types of settings. There are many terms and conditions which are specific to long-term care insurance policies. So, before buying any such policy it is imperative that you understand these terms. This process will help you choose the options that suit you most and get the most out of your policy.
Eligibility for Claims for Long-Term Care Insurance Benefits
Long-term care insurance policies cover the costs of long-term care services only. The services could be custodial or medical. A person would need some external assistance and supervision when he or she becomes impaired in some way.Long-term care insurancecovers care given for both physical and cognitive impairment. Physical impairment leads to inability to perform the activities of daily life. Loss of memory, orientation, dementia - are the results of some form of mental impairment and the patient cannot function on his own in such a situation.
In order to be eligible for receiving long-term care insurance benefits, the policyholder should be unable to do carry out at least two of the six approved activities of daily living. Most long-term care insurance companies consider this criterion before releasing the benefits. These are also referred to as ‘benefit triggers.’
When the need for a claim for the benefits of the long-term care insurance policy arise, the policyholder has to get in touch with the claims department of the long-term care insurance company along with the necessary paper work. The claim has to be accompanied by a certification from an authorized health care professional certifying the need for long-term care and hence meeting the benefit trigger.The insurance company will carry out its own verification.After the claim is approved, the benefit can be paid to the policyholder or to the provider directly.
However, all claims will not be approved and the long-term care insurance company has to let the policyholder know the reasons for disapproval.
Terms and Options of Long-Term Care Insurance Policies
The long-term care insurance market is mostly occupied by private insurance companies. In the absence of ‘standardized’ benefits or too many government regulations, insurers can offer many options to the customers which lets them design a policy best suited to themselves. The choice of options and terms determines the amount of premium for a particular policy to a large extent.
In order to make informed and right choices, it is important to be aware of the available options and how it will affect your premiums or coverage.
- Coverage of the type of care settings – Comprehensive policies, which cover care at home and facility both, cost more than non-comprehensive policies, which cover only either home-care or facility-care.
- Way benefits are paid – Policyholders can opt for receiving benefits directly as per the specified amounts per day or month. Policies may also pay the benefits at actuals up to the approved benefit amounts.
- Choice of benefit amount – This is the maximum amount the policy will pay per day, week or month. Generally, customers are asked to choose from $75 to $300 as the benefit period. Policies with lower benefit amounts will have lower premiums. Benefit amounts should be chosen according to the average cost per day in your location. Some policies pay half of the benefit amount for home-care services.
- Choice of benefit period – Long-term care insurance companies give the option of choosing 2,3,5 or 10 years as the benefit period. Some policies may offer lifetime benefit period. This is the maximum amount of time the policy will provide coverage. The policy will expire when the benefit period is exhausted. Needless to say, shorter benefit periods will mean lower premiums.
- Lifetime maximum benefit – This is the total amount of money the insurance company will pay for the whole term of the policy. Some policies calculate it as the daily benefit amount times the number of days and years of benefit period. Some policies also give the option of choosing a pool amount, $100,000 or $200,000 as the lifetime maximum amount where the policy will keep paying as long as the maximum amount is not reached.
- Length of elimination period – Policyholders can choose from 30, 60, 90 or 120 days as their elimination period. This starts when the insured is certified to need long-term care. The policy will start paying the benefits after the completion of this period and any expense during this period has to be borne by the policyholder. Policies with longer elimination periods have lower premiums.
- Inflation protection – adding this option to the policy ensures that the benefits keep increasing over the years in keeping with the rising inflation rates.The options are –
- Guaranteed purchase option, which lets you raise the benefits after a fixed period every time.
- Automatic Inflation adjustment, where the benefits are raised automatically every year as per the percentage specified.
Other Features of Long-Term Care Insurance Policy
- Level premiums –the insurer cannot raise the premiums for any one individual annually. Premiums can be raised only for the whole class of insureds as the state regulations.
- Free-look period – Insurers allow a period of thirty days for new customers to go through the policy and return it within that time if unsatisfied.
- Grace period and third-party notification –Insurance companies allow a grace period of 31 days to pay the premiums after the expiration of the due date. They may also notify the specified third -party regarding non-payment of premiums.
- Non-forfeiture benefits –Policyholders may be allowed to receive some benefits even if they stop paying premiums, under this option. This option increases the premiums of the policy.
- Guaranteed renewability of the policy –Long-term care Insurance companies cannot cancel or terminate the policy if the premiums are being paid. Even if the health of the policyholder deteriorates or his age increases.
- Pre-existing conditions –It is mandated that long-term care insurance companies have to issue policies for people with pre-existing conditions. They may impose certain restrictions for such cases.
- Joint Long-term care insurance policies –These policies for couples are less expensive than individual polices.
- Options of premium payment –Policyholders have different options of paying the premiums. They can pay monthly, quarterly, annually as continuous payments. They may also pay one single lump sum payment or pay a fixed number of payments to cover the whole premium for the policy.
- Exclusions of long-term care insurance policy –These policies do not cover long-term care which is needed as a result of drug abuse, self-inflicted injuries, conditions caused by war.
The features and options offered by long-term care insurance companies vary widely from state-to-state.So, you have to find out exactly what are the terms and conditions being offered in your area before buying a long-term care insurance policy.
More Useful Links:
Medicaid Long Term Care Coverage