Chapter 32 - Long Term Care Policies

Question 1

Long Term Care (LTC)

Answer 1

This is an add on policy. Many people outlive their ability to perform ACTIVITIES OF DAILY LIVING (ADLs) such as bathing, feeding, dressing themselves. Medical Expense and Medicare plans do not provide nursing home care, Medicaid does.

LTC care must provide at least 12 month coverage, provide a policy book and 30 day free look provision. The premiums have a smaller tax deduction.

LTC covers
-Home Health Care
-Assisted Living
-Nursing Facility care - SNFs, Intermediate Nursing Facility, Custodial Nursing Facility.
-Hospice Care

LTC coverage is triggered when the insured:
- has severe conginitive impairment (alzheimers)
-unable to do 2 or more ADLs for 90 days due to loss of function.

LTC Exclusions
- pre existing conditions for only 6 months back and 6 months forward, can’t require hospitalization as a reason.
-mental and nervous disorders (although Alzheimer’s coverage CANNOT be excluded)
-Alcohol and Drug addiction
-any coverage already provided by Medicare or Workers comp
-Wartime losses
-losses sustained from a felony
-aviation losses

There is a elimination period (benefits don’t pay, drain their savings basically)- although it is like a deductible expressed in days rather than dollars. You have to satisfy the elimination period for coverage to start.
-Service Days Elimination Period - only days that you actually receive service from a provider count towards the elimination period deductible. If you don’t need help for a week or 2, the elimination period stops running.
-Calendar Day Elimination Period - just wait the stated number of calendar days.

Features of most LTCs
-The insured selects a maximum daily benefit amount (such as $200 a day) and a maximum lifetime benefit (such as $500K)
-It is an indemnity plan
-The policy must be either NON-CANCELABLE OR GUARANTEED RENEWABLE for LIFE.
-Must offer an inflation protection provision
-after 90 days of care, a WAIVER OF PREMIUM provision allows the insured to stop paying premiums
-the insured is able to leave the facility for short term home visits, the BED RESERVATION BENEFIT, will pay to reserve the insured bed for a specific time.
-If both spouses have LTC care the spouse who hasn’t exhausted their LTC benefits can share benefits through a Survivor Benefit Endorsement.
-If you have been paying an LTC premium for 3 years but haven’t used the benefits, a non forfeiture provision would allow the plan to be sold and a refund of some of the premiums.
-LTC may provide RESPITE Care for a home caregiver. This pays for a substitute caregiver so the regular caregiver can get a break.
-LTC policies often provide ADULT DAY CARE coverage so that the insured may be placed in a daily “day care” rather than a more expensive care facility.