Long term care insurance is a flexible insurance product that helps cover people in need of consistent care during an extended period of time. Long-term care can include nursing-home care, home-health, and personal or adult day-care for people over the age of 65; or who have a chronic or disabling condition that needs constant attention.
In order to qualify for benefits, you must be unable to perform two of these six day-to-day activities—bathing, dressing, moving from bed to chair, using the toilet, eating, and maintaining continence—and a medical professional must expect your disability to last at least 90 days.
Long term care insurance can protect your savings, preserve your independence, and help you maintain a better quality of life. Since long-term care can be very expensive, insurance is the best way to cover these costs without having to resort to liquidating other assets. Though it usually doesn’t cover the full amount, it will reimburse a portion of the cost of a nursing home, assisted living facility, adult day-care, or in-home help.
When comparing long term care insurance plans, it’s best to take each individual’s specific circumstances into account. Apart from their living arrangements, are additional personalized services necessary as well? These may include therapist, homemaker, and personal care services—the latter of which can help with special assistance while bathing or getting dressed.
Before choosing a long term care insurance plan, look at the fine print of the policy, including premiums, deductibles, benefit limits, and coverage specifics. Are post-mortem premium returns offered? What percentage of each service is covered? How do you submit a claim? Is it easy to cancel the policy?
HOW WE COMPARE LONG TERM CARE INSURANCE
Claims & Benefits – 35%
As with many other types of insurance, long-term care insurance policies have benefit limits, which cap the amount of money the insurance provider will pay out toward covered services. In the case of long-term care insurance, there are either daily or monthly benefit limits, as well as a maximum benefit period, which you select when you enroll. It’s important to consider the amount of coverage provided by your policy when crunching numbers. For instance, if your daily cost of long-term care is $100, and you selected 80% coverage with a $100 daily limit, then you’ll receive $80 in benefits from your insurance provider, and be responsible for the remaining $20 out-of-pocket.
Last, though long-term care insurance policies don’t have deductibles, they do have a waiting or elimination period. This means that once you begin long-term care, you’ll need to wait a certain amount of time before your benefits will begin to pay for your care. During this time, you will be responsible for paying the full cost of long-term care services. Again, this is something you’ll select at the time of enrollment, and most companies have a large range of time to choose from (30 days to 1 year). The longer you’re in the elimination period, the lower your monthly premiums will be.
In order to qualify for long term care benefits, you must require a substantial amount of support and supervision for a minimum period of 90 days, to protect you from threats to health and safety due to severe cognitive impairment. Otherwise, you must be incapable of performing at least two out of six of the following activities of daily living (ADLs) without considerable help: feeding yourself, bathing, dressing and grooming, work, homemaking, and leisure.
Maximum Daily Benefit Limit
Also known as facility benefits, daily benefit limits have different maximums depending on the insurer and the patient’s situation. These typically range between $50 and $500 a day, whereas monthly benefits start at $1,500 and can go upwards of $10,000 a month. If your daily or monthly long-term care costs exceed the daily limit, you’ll be responsible for paying the balance out of pocket.
Lifetime Benefit Period
Maximum benefit periods are measured in years, which means that you are entitled to benefits for the number of years selected. If long-term care is required beyond the number of years selected, any expenses are your sole responsibility to pay. Benefit periods typically range from 2-10 years.
Additionally, some companies have a policy benefit limit, or maximum amount of money the insurance provider will pay out for the life of the policy. This is most common for policies with lifetime coverage. If this is yet another benefit limit on top of the daily or monthly amount and the maximum benefit period, we suggest shopping around to see what your other options are.
Policies & Coverage – 25%
Depending on the level of care required, you can select a policy that’s flexible to your needs and moves with you as your required level of care changes. Whether you live at home, in an assisted living facility, or in a nursing home, long-term care insurance helps cover the cost of the care you receive. There are several ways for insurers to structure a long term care policy, though these can be roughly divided between individual plans or group ones. Some states also offer partnership policies which allow policyholders to retain a specified amount of their assets, if they qualify for Medicaid after using up their insurance benefits. It’s always a good idea to also check whether your policy is tax qualified, since this allows you to receive benefits without them being considered taxable income, and premiums can then be deducted as medical expenses.
The amount of coverage for each level of care depends on the policy you select. The most comprehensive policies provide full coverage, but partial coverage is also generally available, which keep your monthly premiums low. Keep in mind, the more coverage you get, the more expensive your monthly premiums will be. Almost all long term care providers also have an array of additional, optional riders which can increase the amount or type of coverage provided, customizing your policy to better fit your needs.
Since long term care coverage isn’t one-size-fits-all, many insurers offer two main types of policies: traditional and combination or hybrid. Traditional plans are paid continually, and no premiums are returned, unless there is a “return of premium” rider, which pays a death benefit to a beneficiary if the policyholder dies without using the policy. Combination or hybrid policies attach long term care as a rider under a life insurance plan. Terms are determined by the insurer, though there are usually several options to choose from.
Types of Covered Care
Long term care insurers will offer different levels of coverage, depending on a patient’s needs. These can include:
In-Home Care- Not everyone needs 24-hour support or assistance, so long-term care insurance doesn’t just pay for services provided in care facilities, but also for those received in the home. A few of the most common types of in-home care covered by long-term care insurance are Personal Care Services, for daily care tasks like getting dressed or bathing; Homemaker Services, for assistance with daily or weekly household chores, such as grocery shopping, cleaning, meal preparation, etc; and Professional Services, for those requiring medical assistance from a nurse, home health aide, or therapist.
Assisted Living: If you are still able to live with relative independence, but still need access to 24/7 assistance or medical care, an assisted living facility may be a good option for you. In addition to the services mentioned above, this can also include meals, recreational activities, transportation, and access to on-premise community facilities. Adult day care is also covered in this section.
Nursing Home: These can provide the care needed by people unable to live independently, as they require either round-the-clock care or assistance for most, if not all daily living tasks. Of all the care services provided, a nursing home is the most expensive, as the residents require the most amount of care from professionally trained medical personnel. Just as with Assisted Living facilities, nursing homes are well equipped to care for those with special needs. For example, a resident with Alzheimer’s disease may need additional care and assessment to prevent incidents of wandering.
Hospice Care: This is meant to give patients in the final phases of a terminal illness the comfort and support they need, with the focus being on quality of life rather than a cure. The ultimate goal is for people to live as comfortably and pain-free as possible.
Medical Help Systems: Some long term care policies also cover the cost of either rented or leased in-home medical devices, such as respirators or hospital/home care beds.
Some insurers allow their policy holders to use in-network or covered facilities, whereas others permit the use of your facility of choice.
Available Policy Riders
Policy riders are additional features which can be added onto other policies. Though not every insurer will offer all of these, some common long term care riders include:
- Inflation Riders: This is a very common rider, in which your daily maximum benefits and your lifetime maximum benefits increase a fixed percentage every year for an X number of years.
- Increased Benefits: Add this rider to increase the daily maximum benefits or the lifetime benefit limit on your existing policy.
- Spouse Survivorship: When one spouse dies, the surviving spouse on the policy will no longer have to pay their long-term care insurance monthly premiums, but will still receive coverage.
- Shared Care: Allows you and your spouse to pool your long-term care insurance benefits rather than requiring each person to have their own policy.
- Return of Premium: Upon the death of the policyholder, a portion (and in some cases, all) of the total amount of premiums paid for the policy will be returned to the designated beneficiary. These types of policies typically can increase rates by around 50%.
Financial Strength – 25%
Selecting a financially stable insurance provider is extremely important. When you purchase long-term care insurance, you are essentially paying upfront for coverage benefits later down the road. One of the worst things that could possibly happen would be to select a company to work with and make numerous payments, only to find out later that the insurance provider went out of business because they were unable to cover the cost of all the benefits they owed. Not only would you lose the money you paid toward coverage, but also the coverage you were expecting.
To determine a company’s financial strength, look at credit ratings from A.M. Best, Moody’s, or Standard & Poors (S&P). These companies are respected credit rating agencies, which compile data on insurance providers finances, including their profits, payouts, financial reserves, and current ability to meet any outstanding obligations to policyholders, to determine the company’s current and expected future financial stability.
However, understanding the actual ratings can be challenging. Scoring methods differ from agency to agency, and aren’t always obvious. For example, don’t just assume that an A+ is the best possible score, since some agencies rate AAA or an A++ as the highest available scores. It’s never a bad idea to take a look at the complete scoring breakdown for each company, but to make things easier, we suggest looking for companies with scores starting with an “A”. Just as with with school grades, this generally means the company is highly rated.
Reputation – 15%
There are so many long-term care insurance options to choose from that reading reviews from consumers who have experience with these companies can be a fantastic way to help you make a decision. Here are some things to look for when browsing reviews.
- Statistical Significance: Make sure there are a significant number of reviews posted. If there is only a small sampling of reviews, the overall rating is going to mean a lot less than if there are 500 or more reviews. The more reviews there are, the more accurate and useful that overall score is going to be.
- Word Sentiment: Take a few minutes to scan the reviews for specific words that stand out. Do you see more positive or negative language being used throughout? In addition to star ratings, scanning for certain words can be a good way to get a sense of overall customer satisfaction with these companies you’re researching.
- Customer Care: When given the opportunity, does the insurance company take the time to address specific complaints from customers? When a company reaches out to customers whether the review is good or bad, this is a good indicator that they value customer satisfaction. If the company does not respond directly, do any reviews mention how responsive the company was to their individual concerns?
- Learn from other people’s mistakes: When you see negative comments about a long-term care insurance provider, consider how the problem could have been avoided altogether. For example, if the issue was because someone didn’t fully understand the information outlined in the contract they signed, take the time to review yours carefully before signing. If the insurance company was clearly at fault, and they made no visible effort to resolve the issue, then this may be a sign to take your business elsewhere.
The Better Business Bureau has been setting high ethical standards for businesses for more than 100 years. Millions of people depend on their rating systems to identify trustworthy companies, by virtue of the BBB’s continued commitment to fostering honest relationships between businesses and customers.
Trust Pilot Rating
TrustPilot is an online review community, in which consumers share their experiences with services and products. Apart from the fact that getting real-life feedback from people who’ve used a product can be very helpful when choosing between companies, TrustPilot also provides a score, which gives a measure of average overall satisfaction.
This article was provided to us by Consumer’s Advocate.
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