This is a consumer question that we
hear quite often at SeniorMag. Long-term insurance isn't all
that complicated but there seems to be little written about it for
Long-term care insurance generally
pays benefits when long-term care is prescribed by a doctor for a
specific condition or when it is necessary to obtain assistance in
taking care of basic needs.
An example of this might be someone
who has occasional dementia and may have trouble bathing, eating,
and getting dressed. Obviously, physical disability is just as
limiting as mental disability.
Getting proper care at home
The purpose of long-term care
insurance is to make sure that you are getting proper care, not just
any care. Don't count on the fact that your sister's granddaughter
will get a nice paycheck out of staying with you while she goes to
school, just because she helps take care of you when she is
home. It doesn't happen that way.
Home health services
Home health services are typically
covered as long as they are prescribed by a doctor and are performed
by a licensed nurse, physical therapist, or other similarly licensed
professional. In almost all cases, home healthcare workers
must be licensed.
Non-medical home care
Non-medical home care (personal
services) are another matter. This is a field that is changing
rapidly and varies from state to state. Look for laws to
change as well as the way that insurance companies look at these
services. In many states, anyone who wants to can get a
business license and be in the field of home care.
Check your policy to see if it
covers non-medical personal assistance before you sign up. In
most cases it does but there can be some criteria that has to be
met. Some policies specify licensed homecare companies.
If so, be sure that you pick a company that is licensed if you want
these fees covered. In some states, this isn't a possibility
yet because there isn't a license procedure yet.
Nursing care facilities
Most nursing homes are covered by
long-term care insurance so long as they are state licensed.
Again, there may be conditions in your policy so be sure to review
all requirements before you pick a policy. Though most
policies currently cover all state licensed nursing homes, there are
usually provisions that limit the insurance company's exposure by
capping the amount that they will pay.
In the future, look for long-term
care insurance companies to add more stipulations to their policies
including restricting which facilities are covered. Health
insurance companies currently do this with doctors by negotiating
certain rates and you can expect this to come up with nursing
facilities as well. If that is the case, insurance companies
will restrict you to care facilities with which they have contracts.
Most long-term care insurance policies pay benefits when
long-term care is prescribed by a physician as necessary or
medically necessary or when someone can no longer take care of basic
Insurance waiting periods
Most long-term insurance policies
have a minimum waiting time where they will pay benefits. In
fact some policies give the insurance company the right to reject
the policy for a period of time if you should become
incapacitated. The reason for this is that some people will
only get insurance when they know they will need it and this simply
isn't the idea behind any insurance policy.
After you have satisfied the
waiting period, you may receive benefits up to the limits of the
policy. Check your policy to see if there is a maximum
life-time payout. While that maximum may seem reasonable
today, increasing prices and the fact that you may live longer than
expected may use up that maximum quickly.
Many policies now offer an inflation adjustment feature that
increases your per-day benefit to cover higher costs. For example,
the daily benefit amount might increase each year at a compounded or
simple rate of 5%.
Premiums for long-term care insurance can vary widely, depending
upon your age and the level of benefits you buy. Policies that cover
a substantial portion of the daily cost of a nursing home or a
policy with an inflation adjustment feature will tend to be more
The older you are when you first buy a long-term care policy, the
higher the premiums probably will be, because the chances of your
needing long-term care increase with age. A policy purchased in your
early 50s may be relatively inexpensive, compared to one purchased
at age 70. In general, premiums remain fixed each year, unless they
are increased for a class of policyholders at once.