Long Term Care Policy Evaluation

When doing your evaluation, you have to consider:

• Are daily benefit amounts based on an indemnity (meaning that a specific amount is stated) or on reimbursement of amounts charged? Reimbursement policies are more likely to provide the range and level of services that will be needed; indemnity policies purchased today may provide nowhere near the level of coverage needed in the future.

• Does nursing home care include skilled, intermediate, and custodial care, as well as sheltered care and assisted living?

• Does home care include RNs; LPNs; LVNs; physical, respiratory, and speech therapy; personal care attendants; chore services; meal preparation; adult day care; respite care; shopping; and assistance with grooming and dressing? Does home care require a skilled component or is there provision for custodial care by itself? Try to avoid policies that require a skilled component, as this seriously limits the availability of home versus institutional care.

• If medical necessity is required, is it determined by your own physician or someone else?

• Does the policy require prior hospitalization for benefits? These provisions should be avoided because they seriously curtail the coverage for needed benefits; only a portion of needs for care arise immediately after hospitalization.

• Is the policy guaranteed renewable for life? Without this clause, nothing prevents the company from canceling the policy or changing benefits.

• Look for a policy in which the premium amount is based on age at time of enrollment; also, look for a policy with a level premium.

• Make sure the policy is portable, meaning that the benefits are available wherever you are. This is particularly true if you like to travel or live away from your extended family (and might choose to relocate).

• Look for policies that allow an alternative plan of care; for example, if a policy would pay for an alternative setting if a nursing home confinement would otherwise be required. Under such circumstances, for example, the care might include payment for home modifications and medical equipment.

• Make sure your policy has a waiver of premium so that you will no longer have to worry about paying premiums while you are receiving benefits.

• Also look for a bed reservation benefit, meaning a policy provision that will continue to pay the nursing home in order to reserve your bed there should you become hospitalized.

• Does the policy have ample inflation protection? If not, you may discover that a facility you choose could one day become unaffordable within the terms of your insurance benefits.

• Make sure if you have an indemnity policy that the benefit amount is sufficient to cover actual local long-term care cost, with adequate inflation protection to cover cost increases as well.

• Make sure that the policy coverage period is your lifetime.

• Make sure that the plan covers Alzheimer’s disease.

• Make sure that the plan covers preexisting conditions as of its effective date or that the clause is not an exclusion (just a waiting period) and that you have an alternative means of paying for care during the preexisting condition waiting period.

• Make sure the insurer has an adequate financial strength rating.

• Look for a plan that offers a choice of deductible periods (to meet your specific needs based on your other resources).