Long-term care insurance coverage requirements can vary depending upon your policy and the insurance company that issued it. Unfortunately, you cannot assume that all long-term care insurance (LTCI) policies are the same. One of the biggest problems that I encounter when working with clients is that they have not reviewed their policy since it was first issued or their son or daughter is just looking at it for the first time, as they prepare mom or dad for an admission into a facility.
Being aware of LTCI policy requirements for coverage can help you avoid the confusion, frustration and stress that undoubtedly comes with an insurance coverage denial or delay. Here are some of the most common LTCI policy requirements.
Policy Requirement #1: Elimination Period
The elimination period is the amount of time your insurance company requires you to pay your own long-term care expenses before they cover care. Generally, the longer you are willing to wait before coverage starts, the more inexpensive your plan may be.
Most people can choose the length of their elimination period when they first purchase long-term care insurance. It’s easy to choose a longer period in exchange for more affordable coverage. However, it’s likely that decades may pass before a person needs long-term coverage. In that time, health and financial situations change. Many of them are unpleasantly surprised about how the elimination period means they must wait before getting the financial help they need.
When you purchase long-term care insurance, make sure you understand how your elimination period works. Or, if you are getting ready to use your LTCI benefits, be prepared to pay out of pocket during the elimination period. Be realistic about the amount of time you’d be able to pay for needed care. Balance the length of the elimination period with the cost of your policy.
Policy Requirement #2: Duration of Your Illness or Injury
Long-term care insurance covers long-term care – not short-term illnesses and accidents. But, what does that mean? Most insurance policies have specific definitions. Commonly, they require that a doctor certify one of two things: that the insured cannot perform a certain number of “activities of daily living” without substantial help or that the insured has a mental issue that could cause harm to them or someone else if they are left unsupervised. The insurance company usually evaluates the insured to determine whether he or she qualifies. If your need for skilled care is short-term as a result of an accident, surgery or illness, typically your medical insurance provider will pay for these services.
Policy Requirement #3: Plan of Care
Most policies require that you have a treatment plan or “plan of care” at the time of your admission or when you submit claims for reimbursement on your long-term care insurance policy. The plan of care is created by your physician or by a nurse at your facility after an evaluation and prior to the insured’s admission. The plan of care discusses the insured’s diagnosis, along with needed care as a result of health and/or mental health challenges.
Policy Requirement #4: Approved Vendors for Care
Long-term care insurance policies typically reimburse you for benefits such as home health aide care, adult day care or care at a nursing or alternative care facility. Before incurring these expenses, you should contact your insurance company to ensure the vendor or facility you choose will be covered. Care from friends or family will not likely to be covered under your plan, since defined benefits typically require certain licensure.
However, if you are still in the process of buying long-term care insurance to help you get needed care at home, you might want to consider long-term care insurance with a “cash” benefit. These policies pay out a certain amount that you may use however you see fit. You’ll be able to do things like reimburse family and friends for the time they spend providing care in your home.
Of course, every long-term care insurance policy is different. It’s important to know what yours says. Read your plan carefully before purchasing or using it. Take time to review it occasionally, so you know what it says. That way, you won’t be caught by surprise in the event you need it.