How do I buy the right policy?
Long-term care policy design does not have to remain a mystery to consumers. There are some basic design parameters that need to be reviewed and based on your own unique choices, allows you to select the policy that best suits your comfort level, budget, and needs.
Group plans usually have a standard 90-day elimination period during which time you are responsible for the expenses. This is misleading, it is NOT 90 calendar days or three months if you require Home Care, which is the most common type of LTC claim.
At first, most people stay at home and receive 3+ visits a week from a care agency. This means, you have 3 days of credit per week towards the 90 days. However, if you maintain that level usage, it takes 30 weeks of Home Care to satisfy the requirement of 90 service visits. By then you may recover and the insurance company has not paid one nickel because the 90-day elimination period has not been satisfied. Any policy may be written this way but there are better options. The quality Insurance companies available through LTC-IS offer real calendar day contracts. An even better policy upgrade offers ways to reduce these to 0 days. There is considerable advantage to comparison shopping.
Picking an Elimination Period
An elimination period is the initial time period that YOU elect to be responsible for. After you have satisfied the initial elimination days then you qualify for benefits. You begin to receive reimbursement for your claim expenses based on the daily benefit you selected. There are three types of elimination periods:
- Low elimination periods
Generally either 0 to 30 or 60 days
- High elimination periods
Generally 90 days or more
- Split elimination periods
Allow the consumer the lower premium advantage of the higher 90-day elimination on the facility component of the policy, yet offers a 0-day home care elimination option. The advantage of this method is that it allows much quicker access to paid home care services. Home care has a far higher statistical probability of usage than does a nursing home confinement.
Deciding on Inflation Guard
There are generally two primary types of inflation protection consumers can purchase:
- 5% Compound Inflation
Adds 5% to the benefit value based on the previous years attained amount
- 5% Simple Inflation
Adds 5% annually based on the original amount onlyIf you are over 70, we generally suggest 5% simple, assuming it is an available option with the insurance policy you are interested in. Anyone under the age of 70 should seriously consider including compounded inflation protection.
Setting a Daily Benefit Payout
Since we assume that most people can afford to self-insure a minor amount in order to moderate their premium, we normally recommend a $120 to $160 per day daily benefit for a comprehensive care policy.The average cost of care varies in each state and even by location within the state. At the time of the initial review we provide you the latest information relative to the anticipated costs in your neighborhood based upon the state
Nursing facilities:
The most expensive form of care and typically run anywhere from $150 to over $200 per day.
Assisted living facilities:
Typically lower and costs run between $120 to $150 per day for a good facility.
Home care:
Depending on actual services used, home care can cost anywhere between $100 to $400 per day.Choosing a Benefit Period
The majority of shortened/specific benefit period policies purchased are typically three or four years in duration. Statistically, the average anticipated period of care most consumers might require generally will not exceed 3 years in cumulative length. However, there are two ‘types’ of Comprehensive long-term care coverage that consumers can purchase:
Unlimited benefit periods
Which mean the insurance company pays for as long as the client requires care. There is no limit to the length of time that they will pay
OR
Shortened/Specific Benefit periods
Which mean the consumer can chose the length of time they want the company to guarantee payments. For example, 2, 3, 4, 5, or 6 years. These policies are proportionally less expensive than unlimited type.NOTE: Be certain that if you purchase a policy with a shortened/specific benefit period, it includes a feature known as Restoration of Benefits which allows the entire benefit period to be fully restored after a six month recovery without an active claim. It is your safety valve as it allows for recapturing the benefit already paid out should you be fortunate enough to recover.
