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The Ins and Outs of Long-term Care Insurance

The Ins and Outs of Long-term Care Insurance

Understanding long-term care insurance (LTCI) can be a daunting task for seniors and one that often gets brushed to the side until it’s “needed.” Since the industry has evolved to be more flexible, it’s important to know the basics so you can be a valuable resource to your clients and their families as they navigate their policy.

Home Instead® recently released the “Navigating Long-Term Care Insurance” guide, which is designed to help seniors, their families and caregivers better understand what long-term care insurance is, policy benefits, how to determine care needs and initiate a claim. The guide also offers tips and ways caregivers can start planning for successful aging.

The Basics of Long-Term Care Insurance

Long-term care insurance (LTCI) is a form of insurance that is generally intended to cover services needed to care for a person in later life. Policies are purchased and premiums are paid over time. In general, the policy is a contract between the policy holder and the insurance provider and is unique to that individual. It’s likely no two policies are the same, even those through the same provider. A few of the larger U.S. carriers you could become familiar with include Genworth, MetLife, John Hancock, Bankers Life, Transamerica, Mutual of Omaha and Prudential.

A person typically goes on claim for one of two reasons:

  1. When he or she needs supervision because of “cognitive impairment” like Alzheimer’s disease or dementia.
  2. When he or she needs help with at least two Activities of Daily Living (ADLs), which can include: eating, dressing, bathing, toileting, transferring and continence.

Long-term care services that may be included are home care, skilled care at a home, assisted living, adult daycare, respite care and nursing home care. Download the guide for a list of ten signs that can help indicate it may be time for some extra assistance in the home.

Consider this: You might help your client locate his or her policy. Together, review the policy coverage and help answer questions your client might have as he or she assesses care needs. 

Using Long-term Care Insurance

Once your client is eligible based on the criteria above, you can help by learning the policy’s elimination period, which is like a deductible. Many policies use a number of days, such as 20, 30, 60, 90, 100 and 180 for the elimination period. For many policies, for the period to begin, the client must be benefit eligible and be receiving covered care based on a care plan.

Some policies have extra benefits that can be used to make modifications at home like installing a walk-in shower, wheelchair ramp or grab bars to keep the senior safe a home.  Policies may have a benefit for durable medical equipment (DME) like a walker or toilet seat riser that would help make home life a little easier.

Consider this: You might try to familiarize yourself with your client’s policy and triggers to become “benefit eligible.” Note that elimination periods may not always equate to days. For example, if an individual receives covered home care services three days per week with a 90-day elimination period, it could take approximately seven months for benefits to begin if only measuring the “days of service.”

Finding a Care Provider

As a trusted professional, your clients may look to you to help find the right care provider. Sharing a brief description of the three kinds of providers with your clients and being familiar with their individual level of care, positions you to better help guide your clients find the safest and best caregiving scenario for their needs. Below are the three care provider categories:

  • Agency employees: Most agencies, such as Home Instead, hire screened, trained and insured caregivers. Agencies typically handle payroll taxes and employment obligations. Many provide additional support between the family, caregiver and client.
  • Independent contractors with a registry: Contractors are usually recruited, screened and referred to the client. The older adult may become the employer, assuming all labor-related responsibilities, and replacement caregivers may be unavailable in certain business models. While the contractor may have had criminal background and reference checks, he or she may not be receiving support, training and continuing education.
  • Independent caregivers: Most are responsible for finding their own clients and most LTCI policies do not cover independent caregivers. Like the registry, the older adult may assume an employer role and associated responsibilities. The older adult could assume the employer risk as well, since the independent contractor may not be covered by workers’ compensation, liability and bond insurance.

 Consider this: You might discuss the differences between providers and the pros/cons of each. Refer to the LTCI guide for a list of questions to ask each type of provider.

 Initiating a Claim

There is paperwork that goes with opening a claim. Generally, the policyholder or their designated power of attorney will work with the LTCI team to initiate the paperwork. Usually at this time, clear communication with the care provider is paramount. Both the provider and client must know the elimination period so realistic payments and cash flow planning are in order. Most policies pay directly to the policyholder unless benefits are assigned elsewhere.

Consider this: If possible, get a copy of the policy to review with the policyholder. This can help everyone understand what is covered and the claims process.

Last revised: July 11, 2018

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