Long-Term Care Insurance

The Issues

Many people are under the mistaken belief that Medicare and Medicaid supplement policies will cover the cost of long-term care. While these plans provide benefits to help pay for hospital care and physician services, they provide very limited payment for the cost of long-term nursing home care.

Medicaid does assist with the cost of long-term care, but it is a needs-based program. Relying on Medicaid to cover your care limits the care options that may be available to you. The purchase of long-term care insurance gives you the flexibility to choose the type of care you need in the setting you desire.

There are hundreds of different policies offered by a number of different companies and no two are alike, so it is very important to be an educated consumer.

What You Need to Know

When deciding whether to buy a long-term care policy and what type of coverage to buy, you need to carefully review the policy’s terms. You should ask the following questions:

• How much coverage do I need? You must decide on a daily benefit amount: the amount of payment you need to help cover your cost of care. You must decide on the benefit period which can range from two years to lifetime coverage.

• Does the policy cover nursing home, assisted living and care in your own home? Most policies now cover all three, but some have reduced benefits for assisted living or home care.

• What is the elimination period? This is the period of time during which you will have to pay on your own before payments under the policy begin.

• What triggers payment under the policy terms? You become eligible to collect benefits under most policies when you have been diagnosed with a cognitive impairment or are unable to perform two (sometimes three) activities of daily living. It is also important to understand who will be responsible for making this decision.

• Is there inflation protection? The amount of coverage you need today may be inadequate 10 or 20 years from now. Most companies offer inflation riders for an additional premium.

• Is the insurance company highly rated (A or A+ with A.M. Best Rating Service)?

Where to Go for Help

Many of the questions we have raised are complicated, but they are important in understanding what you are buying. After you have reviewed long-term care policies, you may want to have them reviewed by someone independent of the insurance company.

Many states have insurance commissions or insurance departments that have prepared comparative reviews of different policies available in their states. You can request these from their offices.

Local Area Agencies on Aging in your community often have an ombudsman who is either familiar with these issues or can refer you to someone who is.

Your attorney or financial planner may also be a source of independent advice.

The Role of the Elder Law Attorney

Planning for the expenses of long-term care as well as planning for other issues related to disability is an important part of the practices of many Elder Law attorneys. The need for long-term care insurance and the type of insurance to choose is an important topic to discuss with your Elder Law attorney. Always be certain to assure that the attorney has experience and training in the area in which you are seeking assistance.

This information is provided as a public service and is not intended as legal advice. Such advice should be obtained from a qualified Elder and Special Needs Law attorney.

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