Did you know: 70% of those currently over 65 years are expected to use some form of long term care for their future healthcare needs. How best will they be able to afford that care is something that worries caregivers and seniors.
Some people think that Medicare will cover all their bills, but in reality your senior loved one will have to pay for long-term care services that are not covered by a public or private insurance program – – which could be more than they (or you) can afford. That is one of the looming financial issues associated with our longer lifespans and aging population, one which families will face head-on.
Your senior loved one may have been one of many who bought a long term care insurance policy twenty or more years ago to help them pay for healthcare expenses. They probably have paid their premiums diligently, expecting that sometime in the years to come this will help them with financing care they need as they age.
Recently we have been asked several questions about long term care health insurance from aging seniors who just remembered that the policy exists or came across it in the files. They wondered if they might be able to actually make a claim against it for care needs and other items included in their coverage. They have had the policy for many years and put it away ‘for later’ when they really needed it but have forgotten about it and could potentially use it now.
The first question we asked them was “have you read it lately“? What coverage seniors signed up for in years past from an insurance agent who thought this was the right step for them to take to meet future needs may be important for them right now. Family caregivers may not even be aware that such a policy exists or what benefits could be requested.
A policy won’t provide benefits if nobody knows about or remembers it!
Do They – Or You – Have the Answers?
If your senior loved one has a long term care insurance policy, are you aware of what it covers or limits? Here are some questions to ask to be sure you are making the best use of the policy and getting all the benefits to which your senior is entitled.
- What is the likelihood that they have re-read their policy since they signed on the dotted line or that you even know of its existence?
- Do they remember what benefits they have paid for through the years?
- Do they know which agent to call, since the one who sold them the policy is very possibly not the same one that is currently responsible for its contents?
- Do they understand how to make a claim against their long term care insurance and any stipulations that must be met before they can collect?
- Do you know any of the benefits for which they are entitled under the policy as their family caregiver and adviser?
- Does the LTC insurance company have a copy of any healthcare powers of attorney that qualify you as the primary caregiver to make a claim or even inquire about the coverage?
LTC Insurance Benefits and Requirements
The industry that sold our seniors on long term care insurance policy has undergone innumerable changes in the years since our loved ones purchased their plans. Many insurance companies no longer even sell these plans. Others have changed hands so that the carrier may be different than the one with whom they originally did business.
Many of today’s seniors, and we as family caregivers, may well not be able to afford a LTC policy at this time, nor would we qualify. It certainly doesn’t seem like a premium we would pay at this time could return any of our investment in the future. At a minimum, it is a decision to be weighed carefully.
It was at one time a great idea and many seniors have benefited from their long term care insurance policy.
Long Term Care Insurance Covered Items
Long term care policies usually provide services for custodial care and personal care needs in a variety of different settings, including home or facility.
Covered services typically include activities of daily living such as dressing, eating, bathing, grooming, as well as house cleaning, safe transfers, transportation, therapy, skilled professionals and medication management. It may also pay for adult day care or care coordination services. Some of these different things can be provided with different levels of coverage options depending on what your senior selected.
Some long term care insurance plans also cover the cost of home modifications that would allow for safe aging in place. That’s important to remember, even if no other benefits are applicable at this time.
The policyholder is reimbursed on a per day basis for covered services. There is usually a waiting period, called an elimination period and measured in time similar to a deductible, which is measured in dollars once services are needed and there are limits on each point of coverage with maximum amounts of coverage over the life of the policy. During the elimination period you must either receive paid care or pay for the care yourself. Each policy can have a different elimination period timeline depending on what our senior selected such as 30, 60 or 90 days. Some policies will give payouts for the life of your senior.
Policies generally require some documentation concerning what medical condition is present, what type of care is medically necessary – also known as a benefit trigger – as well as assessments and prescriptions from the healthcare provider may be necessary before coverage can begin.
What if They Want to Buy a Policy Now?
If your senior loved one has been thinking about buying a policy now, it is good to really investigate all available policies, since there is no one-size-fits-all policy. Remember to consider whether the premium cost will be affordable not only now but in the future.
There are many health conditions that will likely exclude them from being eligible to purchase a plan at this point in their life, such as if they have certain disease diagnoses such as Alzheimer’s Disease or any dementia, Parkinson’s, a stroke in the last two years, metastatic cancer or AIDS. If they have already received long term care services or assistance with any of their activities of daily living they may be denied coverage. Also, if they are still eligible, the older they are and the chronic disease processes they currently have may increase the cost of their premiums.
When in doubt, ask before getting too far in any process.
Consider LTC Insurance Options & Implications Thoroughly
Be sure to understand what care your senior loved one may require based on their health condition so that you can be sure they get enough coverage without paying for too much or even too little.
Before buying a policy, ask whether the premium will go up with inflation or if there is automatic inflation protection. Be familiar with the history of that particular company with regards to their insurance plans. Another consideration is tax credits for the cost of premiums. If your senior itemizes deductions and has medical costs in excess of 7.5% of their adjusted gross income, they may be able to deduct the value of the premiums from federal income taxes depending on their age. States may also offer some type of credit so be sure to investigate that as well.
Be on the lookout for new insurance products, including combination plans that marry life insurance with the long term care benefits. There are also accelerated death benefits (ADB) plans available, which allow you to receive a payout of up to 50% of its value from your life insurance plan prior to your death to help pay for long term care costs.
Check with your state Medicaid office, as this ADB plan may impact your Medicaid benefit. Keep in mind that taking money from a life insurance plan will naturally limit the death benefit for your senior’s survivor. Learn all you can about the options available to your senior as well as any potential benefits/consequences. The premium alone should not be the determining factor in choosing a plan.
Because long term care insurance policies vary so greatly, it is a good idea to know exactly what your senior loved one’s policy covers, any limits of time or amount and how to claim the benefits. Getting any tax credit is a great idea too.
As with all insurance decisions, the financial implications may be significant down the road. The decision that looks good today – and may help fix a current problem – may carry significant undesired implications later.
Do you have any experience with long term care insurance that you would like to share? We would love to hear from you.
It’s not enough that you have a policy, but what’s important is that you actually use it if you need it. This is a great reminder for our seniors and their families. Yes, LTCI policies need to be read on a regular basis so that policyholders can check not just what’s covered, but if they can actually use their benefits. This is very informative so we featured it in our Weekly Digest. You can read it here http://www.ltcoptions.com/weekly-digest-retirement-challenges-ltc-women-options-ltc-coverage/. Thanks!
Thank you Holly, I appreciate you sharing the article with your readers. It is important for our seniors to gain all the benefits for which they are entitled and have paid for in premiums over the years especially if it will help them stay at home safely as long as possible!
I agree with Holly. I know individuals who do not use their policies – it’s crazy. Why pay so much for the premiums when one doesn’t use? It’s sweeping issues under the carpet saying, “I really don’t need help.”
Carol, isn’t it amazing that people pay for a policy and then don’t capitalize on it! My recent interaction with getting a claim submitted was not easy for the senior involved. It is as if the insurance company has no intention of every paying a claim. I wonder if this is a roadblock for some? For some seniors it may not be worth the extreme effort to get the claim which stalls them and not just feeling they don’t need help. Some do need help but may not know how to be aggressive enough to get it. I also feel that many family caregivers are unaware of the LTCI policies and need to pursue their presence and what they cover for the benefit of the senior. Thanks for your input and help getting this message out to our seniors and caregivers!