Yesterday, I started a series of posts, for this week, on what to look for when you are reviewing your Long Term Care insurance.
Today I want to pick up where I left off. I want to try to explain some issues about LTCI that often cause confusion.
Most everyone understands that they are required to pay their premiums. What they often do not understand is that before the insurance company will pay benefits, most policies have 2 or 3 other requirements that you have to meet.
Most plans require you to pay for your own Long Term Care expenses for a specified period of time before they will pay anything. I have seen policies where there is no Elimination Period and others where the insured has agreed to pay his own expenses for a full year before the insurance company is required to pay anything.
You will be able to choose which Elimination Period you want when you first buy the policy. The longer you are willing to pay your Long Term Care expenses out of your personal savings, the longer Elimination Period you can elect and the less your premiums will be.
CAUTION: There are 2 types of Elimination Periods. One insurance company will count only days that you have to hire an aide. Another insurance company will count every day after a doctor says that you are unable to perform the Activities of Daily Living that are mentioned in your policy.
Since it can be 20 or more years from the time an individual first buys a LTCI policy and when a claim is made, it is easy to forget what type of Elimination Period was elected and how long an insured has agreed to pay his own Long Term Care expenses before the insurance starts paying.
During your review, make certain that you take the time to understand how your Elimination Period works so that you can avoid frustration in the future when you expect your insurance company to pay your Long Term Care expenses and they don’t.
LTCI is not designed to help you as you recover from short-term accidents and illnesses. If you want insurance for that, you should consider Short Term Disability, Critical Illness or Accident Supplement insurance.
Recently, a friend of ours required foot surgery. She was unable to care for herself for almost 6 weeks. By the time she was recovered, her husband was ready to pull his hair out.
It would have been “nice” for him to be able to hire someone to help him take care of her. However, LTCI would not have been the solution in this case.
Most LTCI policies will require that a licensed physician certify that the insured will be unable to perform at least 2 of the Activities of Daily Living without substantial help or have a mental issue that could cause harm to them or someone else if they are not supervised. Since our friend was expected to make a full recovery in less than 90 days, LTCI would not be much help.
However, I have another client who suffered an accident during his late 40s. As a result of the accident he must live the rest of his life in a wheel-chair. He also suffered some brain damage that has cost him some of his cognitive functions.
Sadly, he did not anticipate the accident and had no LTCI. If he had, since his limitations have exceeded the 90 day duration, the costs for hiring someone to help his wife would be paid.
Most LTCI policies require the insured to work with the supervising physician to develop a written plan of treatment. Many people hire a professional “Care Coordinator,” who understands what insurance companies require, to help them. Although most plans require a written plan of care, they do not require you to hire a “Care Coordinator.”
Although you may be able to prepare your own Plan of Care, it is likely that your insurance company will pay for you to hire a professional “Care Coordinator.” As you review your plan, see if that benefit is available to you. If it is, you can save yourself, or a loved one, the frustration of researching and writing a “Plan of Care.”
The most popular reason for people to buy Long Term Care insurance is so they have the money required to hire an aide to help them continue to live in their own home when their bodies or minds start to decline.
This is one of the tricky parts of LTCI to understand.
Most LTCI policies pay on a “Reimbursement” basis. That means that they will only pay for actual Long Term Care expenses for which you can supply receipts.
“Reimbursement” policies typically have some restrictions that you must pay attention to.
- “Reimbursement” type policies typically restrict you to using approved vendors for your Long Term Care needs.
- “Reimbursement” type policies do not give you money to pay your friends or family for the care they give you.
If you want to reimburse your friends or family for their time and expenses to help with your Long Term Care expenses in the future, you will need to anticipate that need now.
Some of the newer LTCI plans offer a “Cash” benefit in addition to the “Reimbursement” benefit. If yours does, you can use that “Cash” benefit in any way you see fit. That includes reimbursing a friend or family member who must take time away from work to care for you.
Different insurance companies have different options and requirements. It is not safe for you to assume that all LTCI policies are the same.
One of the biggest problems that I encounter when I am working with people is that they have not reviewed their policy since they put it in the filing cabinet when they first got it.
In the case of Long Term Care insurance, there could be 20 years, or more, elapse between the time that you buy your insurance policy and when you make a claim. During that time, a lot can change.
At least once every 5 years, take the time to pull your insurance policy out of your filing cabinet and review it. My experience is that those who know what to expect from their insurance company experience very few problems.
The ones who experience the frustrations of denied claims are usually the ones who fail to do what is required of them.