Long Term Care Insurance
Three State Comparison
CALIFORNIA
Long term care ("LTC") insurance in California is highly regulated. Only three categories of LTC insurance policies may be sold: (1) Facility only (skilled or residential) (2) home care only or (3) comprehensive (both). These policies must include at least 8 benefits: a nursing home benefit, a Residential Care Facility for the Elderly ("RCFE") benefit for assisted living, and 6 home care benefits: Home Health Care, Adult Day Care, Personal Care, Homemaker Services, Hospice Service and Respite Care.
Requirements
Described below are the features that are currently required in a long-term care insurance policy approved under current state law. However, California law has changed many times, and older insurance policies may differ.
Benefit Triggers
All long-term care policies require that your physical or mental abilities be limited to one of three standards before benefits will be paid. These standards are often called Benefit Triggers.
- Impairment in Activities of Daily Living (ADLs). The law requires tax-qualified policies to pay benefits if you are impaired in 2 out of the following 6 ADLs: bathing, dressing, transferring, eating, toileting and continence.
- Impairment in Cognitive Ability (or Cognitive Impairment).
- Medical necessity
Conditions
All policies will require you to meet certain "conditions" after the "benefit triggers" have been met and before benefits will be paid:
- Elimination Periods: the period of time you must wait after you qualify for care, and are eligible to receive benefits before the company will begin paying for your care.
- Period of Care: Usually begins on the first day you are eligible for benefits, and ends after a treatment-free interval during which you do not need any benefits.
- Plan of Care: This is a plan written by your doctor or a medical team (such as a home health Agency's health care team) that establishes your need for care, and describes the kind of care you need, and the frequency of the required services.
- Care Management: Some policies include Care Management features. A Care Manager may assess your condition, consult with your doctor, establish a Plan of Care, follow your progress, and recommend care providers.
Benefits
The Daily Benefit Amount: This is the maximum amount the policy will pay for each day of care. Some policies pay the daily benefit when you are in a nursing home, but they pay a percentage of that amount for all other kinds of care. For instance, if the maximum daily benefit amount for nursing home care is $100, the daily benefit for Assisted Living must be 70% of that amount, and 50% for home care. Some companies will pay up to 100% of the daily benefit in each place covered by the policy, or the daily cost whichever is less. Some also pay the home care benefit monthly to allow care to be planned, scheduled and paid for on a weekly or monthly basis.
Duration of Benefits: Policies are typically sold to cover 12 months or more of care. You can buy a policy that only pays benefits for one year, or one that pays for 2, 3, or 5 years, or one that pays lifetime benefits for as long as you live. The premium is calculated in increments of twelve months, and the cost is based on each year of coverage you buy. Two years of benefits costs more than one year, and five years more than three. Lifetime benefits can be very expensive. Most people choose something less than lifetime benefits, based on the amount of premium they can afford.
Maximum Policy Benefits: This is the total dollar amount the policy will pay out over your lifetime once you trigger benefits, regardless of how you collect those benefits. In California companies must use a "pool of money" method of paying benefits. For instance, if you bought a policy that paid $100 a day for three years, your maximum policy benefits would be $109,500. If you used your benefits at the full amount every day your benefits would last three years. If however your care cost less, or you only used the home care benefit at $50 a day, your policy could last much longer than three years.
Inflation Protection: If you purchase individual long-term care insurance, your insurer must offer you at the time you purchase the policy the option to purchase an inflation protection feature.
FLORIDA
Standard Provisions
Long-term care policies are not standardized, resulting in many different policy designs. However, there are some common provisions that must be part of long-term care policies sold in Florida.
- Long-term care policies must cover at least 24 months of skilled, intermediate or custodial nursing home coverage supervised or recommended by a doctor.
- Long-term care policies must provide at least one lower level of care, such as home health care or adult day care. The benefits for this lower level of care must have at least half the benefits of the nursing home care, in both the benefit period and the benefit amount. For example, if you bought a policy with a two-year nursing home benefit, the lower level(s)of care must last at least one year.
Coverage
While long-term care policies vary in coverage, they usually will pay either a fixed-dollar amount (an indemnity) or the actual costs of care. However, policies that pay for actual costs usually have a specified daily benefit amount that puts limits on how much can be paid out each day. There may also be a limit on how many days the benefits will last.
Triggers
Most policies require that you be unable to perform a given number of activities of daily living, such as dressing, bathing and eating, without assistance. Some policies specify that they will cover only "medically necessary" care. Before buying such a policy, make sure you understand how the policy defines "medically necessary." Most policies also have a benefit trigger for "cognitive impairment." Policyholders can only qualify for benefits if they are unable to pass tests assessing their mental functioning. This standard is important if a person has Alzheimer 's disease. An insurance company may deny coverage to an individual who already has Alzheimer's or any other pre-existing condition. Insurance regulations require long-term care policies to cover Alzheimer's for existing policyholders. Read and understand the terms used in the policy and how they apply to your coverage. A policy usually includes a section that lists and defines terms.
Maximum Benefit
The benefit may be a set dollar amount or may be stated as the number of years, months or days you will receive benefits. However, before the benefits start, you must satisfy an elimination period. The elimination or waiting period refers to the length of time you must wait after entering a nursing home or using home care before benefits from your policy will begin. The elimination period will range from zero to 180 days.
What is Not Covered?
Read the exclusion section of the policy carefully. Policies sold in Florida cannot exclude coverage for named conditions (stated in the policy) or diseases such as Alzheimer 's or similar organic brain disorders, like severe dementia. Most long-term care policies will exclude coverage for:
- mental and nervous disorders or diseases (except organic brain disorders), alcoholism and drug addiction,
- illnesses caused by an act of war,
- treatment already paid for by the government and
- attempted suicide or the result of an intentionally self-inflicted injury.
NEW YORK
http://www.ins.state.ny.us/lntmcare.htm#lntm5, NY State Insurance Department, Basics of Long Term Care)
All insurance policies covering long term care services currently being sold in New York State are indemnity policies. Indemnity policies are those that pay a specific dollar amount for each day you spend in a nursing facility or for each home health or home care visit. Some of these policies pay the daily benefit amount regardless of the charges, others will pay covered charges, or a percentage of covered charges up to the daily benefit amount.
Over time, as nursing home and home care charges increase, the daily dollar amounts which are payable under these policies do not increase, however, insurers selling these policies are required at the time of sale to also offer an "inflation protection" benefit. All Partnership approved policies must include an inflation protection benefit of at least 5% compounded annually unless the policy is purchased at age 80 or above. This benefit increases the daily benefit amount over time to help keep pace with inflation and increased expenses. Without the "inflation protection" benefit, you will be paying a larger amount of money out-of-pocket should you need to avail yourself of nursing home care or home care.
Some insurers also offer an option to increase the daily benefit amounts and maximum policy benefit at a future time. Under this option, you have the ability to increase the amounts every specified number of years. Unlike an inflation protection benefit purchased at the same time as the policy, if you opt to increase the daily benefit amounts and maximum policy benefit under this option, your premiums will increase based on your attained age at the time you opt to increase the benefits.
United Policyholders is a non-profit organization founded in 1991 and dedicated to educating the public on insurance issues and consumer rights. UP publishes educational materials and serves as a resource for individual and business policyholders and residents of communities with insurance problems. UP’s Amicus Project provides information to courts of law to support policyholders’ legal rights. UP unites policyholders and their advocates by sharing information. Write to UP at 110 Pacific Ave., PMB 262, San Francisco, CA. 94111, call us at (510) 763-9740, or visit our website at www.unitedpolicyholders.org.
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