What A Good Long Term Care Policy Should Include
By: Law Office of Sean D. Ethington | Posted: 12th August 2010
As long-term care costs continue to rise, long-term care insurance is becoming increasingly important as a source to pay for care. Long-term care insurance can help, but the contracts are notoriously confusing. The following are some tips to help you sort through the different options and find what is right for you.
Find a strong insurance company: The first step is to choose a solid insurance company. Because it is likely you won't be using the policy for many years, you want to make sure the company will still be around when you need it. Make certain that the insurer is rated highly by a service that rates insurance companies, such as Moodys, Standard & Poor's.
What is covered: Policies may cover nursing homes, home health care, assisted living, hospice care, or adult day care, or some combination. The more comprehensive the policy, the better. A policy that covers multiple types of care will give you more flexibility in choosing the care that is right for you.
Waiting period: Most policies have a waiting period before benefits apply. This period can be between 0 and 90 days, or even longer. You will have to cover all expenses during the waiting period, so choose a period you can afford to cover. A longer period can mean lower premiums, but be careful if you are getting home care. Look for a policy that bases the waiting period on calendar days. For some insurance companies the period is not based on calendar days, but on days of reimbursable service which can be very complicated. Some policies may have different waiting periods for home health care and nursing home care, and some companies waive the waiting period for home health care altogether.
Daily benefit: This is the amount the insurance pays per day toward long-term care expenses. If your daily benefit doesn't cover your expenses, you have to cover additional costs.
Benefit period: When you purchase a policy, you need to choose how long you want your coverage to last. In general, you do not need to purchase a lifetime policy - three to five years worth of coverage is normally adequate. In fact a new study from the American Association of Long-term Care Insurance shows that a three-year benefit policy is sufficient for most people. According to the study of in-force long-term care policies, only 8 percent of people needed coverage for more than three years. So, unless you have a family history of a chronic illness, you aren't likely to need more coverage.
Inflation protection: As nursing home costs continue to rise, your daily benefit will cover less and less of your expenses. Most policies offer inflation protection of 5% a year, which is designed to increase your daily benefit along with the long-term care inflation rate of 5.6% a year. Although inflation protection can significantly increase your premium, it is strongly recommended.
Medi-Cal benefits alternative: (California) If you or a loved one are facing potential placement in a long-term care facility and do not have long-term care insurance, an alternative form of payment may be the Medi-Cal program. Unfortunately, many people are misinformed about the eligibility criteria Medi-Cal uses to determine eligibility. Despite what you might have heard, you do not have to be impoverished in order to qualify for Medi-Cal benefits. With proper planning it is possible to implement various qualification techniques in order to qualify for Medi-Cal benefits and to minimize or even eliminate potential Medi-Cal recovery against the Medi-Cal beneficiary's estate.About the Author
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Tags: waiting period, flexibility, insurance company, contracts, insurance companies, home health care, premiums, insurer, nursing homes, long term care, hospice care, term care insurance, calendar days, waiting periods, adult day care, long term care insurance, rates insurance, nursing home care