The purpose of this article is to share insights we've gathered over 14 years in the senior care industry regarding long-term care insurance, or LTCi policies. This article is not meant to be legal advice or a promotion to sell any long-term care policies or products.
Long-Term Care Insurance or LTCi is a type of insurance coverage designed to provide financial assistance for individuals who require long-term care services due to chronic illness, disability, or aging.
This type of insurance covers services not typically covered by regular health insurance or Medicare, such as assistance with daily activities like bathing, dressing, and eating, as well as services provided in a variety of settings including nursing homes, assisted living facilities, and in-home care.
In short, Long-Term Care Insurance provides comprehensive coverage for long-term care needs, including in-home care services, while regular medical insurance primarily focuses on covering medical expenses related to acute conditions and illnesses, with limited coverage for long-term care services.
As you can imagine, it is difficult to summarize all plans into one article, so after having read and submitted claims on literally hundreds of these policies, we will attempt to provide some insights into what we have learned over the years. Hopefully, this information will be helpful for those considering, currently holding, or assisting a parent with such policies.
This article simply lists some of the key terms and concepts used in many policies, and then provides a layman’s description of how we have seen it impact your benefits.
Key Terms and Concepts
Licensed, Qualified, or Certified – Based on my reading of many policies, some insurance policies describe who can provide the service as something like, “The provider must be licensed, qualified, or certified.”
In states where licensing is required for non-medical home care agencies, this is less of a question since they can not do business without a license. However, in Idaho, a license is not required specifically for non-medical in-home care services, so a few clients have been hung up on this point. In the past, when something like this was stipulated in a policy, we first tried to call the company and explain Idaho has no such license. The requirements of “certified” or “qualified” can be met with formal training programs (i.e. qualified) or a Certified Nurse Aid (i.e. CNA certificate). I have seen a few agencies in Idaho that are licensed as a “Home Health Care” provider that use this licensing for non-medical home care, but the two are not mutually regulated.
Qualification for Benefits – When a client needs to use the benefits of an LTCi, the first question they have is “Can I use it now?” The criteria for using most LTCi benefits is relatively simple for most policies. Typically, the benefits can be used when you require help with at least two “Activities of Daily Living” OR possess a “Severe Cognitive Impairment”.
In other words, if a severe cognitive impairment exists, that trumps the 2-ADL requirement. Activities of daily living, or ADLs, include eating, bathing, dressing, continence, transferring, or toileting. A cognitive impairment is often determined if a person has an impairment not allowing them to remember key living tasks, or making them a danger to be independent. For a more detailed explanation of ADLs and Cognitive Impairment, check the pdf below:
Understanding Qualifying Activities for Severe Cognitive Impairment and Activities of Daily Living
Elimination Period – Simply put, this is how many days of care a person must receive, and pay out-of-pocket before benefits kick in. In other words, if your policy has a 30-day elimination period, you are required to pay for 30 days of care before benefits are paid. However, how these 30 days are counted is specific to each policy. There are “riders” on policies and other specific definitions where this feature varies.
Some policies have “acceleration riders” on them where only X number of days are required each week to count the full week towards an elimination period. Some policies only count the days where assistance was provided. If affording care is difficult for the client, sometimes policies do not stipulate how many hours of care must be had before counting a day towards this elimination period, so an agency could be hired to provide 1 hour of care per day until it is met. In our experience, a 90-day elimination period is considered by clients to be “too long” when they go to use it, so a 30-day or less is recommended if the cost difference is not prohibitive.
Maximum Benefit – Policies set limits on the highest benefit you can receive. This limit depends on whether it's calculated daily, weekly, monthly, or yearly. Within a single policy, these maximums can differ depending on where the care is received, like at home or in assisted living.
Inflation Rider – Policies that include an inflation rider add a percentage to the maximum benefit allowed. This can mean a significant increase in your benefits. The most common inflation rider amount we have seen is 5% per year. That means if you have a maximum benefit of $100,000 per year, after 5 years of your inflation rider being applied, your maximum benefit would be over 25% higher, or about $127,000.
Plan of Care – This is the document created to spell out what care services will be provided by the long-term care service provider. Some LTCi policies require this to be created or approved by an LPN or RN, but many do not. In our experience, most home care agencies do create this document and are required to submit it to the LTCi carrier.
Conclusion
Although there are many other terms defined in LTCi policies, our experience tells us that those aforementioned terms are the ones either overlooked or less understood when trying to use benefits or buy a policy. Understanding these basic LTCi terms can help you get the most out of your policy and obtain the help needed when you need it.
If you have any questions, feel free to call our office M-F, 8am-5pm at (208) 273-9308, or click here and we would be more than happy to help answer your questions about LTCi policies or other questions about senior care in general.
