What Happens When I Make a Claim?

Due to the length of time we have worked in LTCI, lately we have had many clients go on claim. We have discovered some interesting insights:

What are my Benefits? Most people purchase their long term care policies years before they ever have to use it making it very easy to forget just exactly what benefits they purchased and why they structured the plan a particular way. In addition, family members are rarely involved in the decision process (though we encourage it) when the policy is purchased, but often end up having to help when it is time to make a claim. We have found that our clients and their families find it reassuring that we are still around and can assist them through this unfamiliar process. Having a seasoned agent, not a “local” agent who can no longer be found, is an important factor in choosing your policy.

Elimination Period: This can be an area of confusion for people when they go on claim. The Elimination Period is really just a Deductible (it is the number of days you will have to pay for your care before your LTC policy begins to pay). Most people purchase large deductibles when buying insurance to reduce their premiums. This is true of LTC Insurance as well. However, at claim time, no matter how wealthy the client is, or their ability to fund a long deductible; people want help NOW. Medicare or Health Insurance is designed for and can often be used to handle the initial acute stages of care. We counsel our clients and/or families to work with their medical planners to set up appropriate services that might also be *eligible type providers (see below) under their LTC policy should the care become chronic (typically 90 days or more). This way, if they do need to access their long term care policy, the care days used will likely count towards their policy Elimination Period. Remember, this is LONG TERM Care Insurance, and was generally not designed to cover the short term care needs that occur and are more likely covered under Medicare or Health Insurance. Also, most people have Tax Qualified LTC policies which include a federally mandated clause that there be a “90 Day Expectation of Care” before benefits can be paid. We are told the purpose for this was to limit the possibility of rate increases due to the unintended use of LTC policies for short term care.

IMPORTANT: If it turns out that you will need to hire someone to care for you at home and Medicare (and therefore your Medicare Supplement or Medicare HMO) refuses to cover the care, it is essential that you contact your LTC insurance company PRIOR to hiring any services. Ask the company to confirm if the caregiver is an "eligible provider" under the policy you own. Do this even if you are paying for the services out of your pocket (for example, when you are in your "Elimination Period" where the policy won't be paying benefits). The reason is this: If the agency or person you hire doesn't meet the definition of an "eligible provider" under your policy, then the days you use them for your care may not count towards your Elimination Period.

In addition, before you pack up and move to an Assisted Living Facility or Residential Care Facility, it is always best to find out if that facility offers the type of care you may need and is an "eligible provider" under your policy.

*Note: "Eligible Provider" doesn't mean that the insurance company has a restricted list of Facilities or Agencies that you must use under your policy. It is simply a definition that the policy provides that is used to measure whether a particular care provider qualifies for paid services under the policy. Typically they will require that the provider be licensed (where state licensing is required) and have the ability to document and provide for a proper plan of care based on your particular health needs.

Why is it that most LTC Insurance won't pay for that freelance nurse that your friend told you about that can provide care "much cheaper" than an agency? Sadly, in our litigious society, sometimes otherwise good solutions get tossed out to prevent the abuse of a few. It is very difficult for an insurance company to oversee care and get good documentation provided by a "freelance" person. Insurance companies require good documentation of care for many reasons, mostly to assure that you as the patient truly are receiving the care you require, and to prevent fraudulent claims. What attorney wouldn't want to name an insurance company in an oversized law suit in the event that the freelance person you hired (and the insurance company paid for) caused you harm. Now from YOUR standpoint; would you want to be liable if they fell and injured themselves at your house? What about if the IRS determines that you are their employer and you now owe payroll taxes? Or on a less dire note, what if they simply become ill and can't come in to help you that day? If you work through an agency, they are typically bonded and insured and will have backup personnel in the event your caregiver is ill.

Here are some additional tips that may help you should you need care:

Contact your agent if he/she is still working in the industry. They should be able to help you, or your family members handling the situation, with contacting the insurance carrier to get a claim started and answer questions about the type of policy that you purchased. This is another good reason to choose an experienced agent with tenure in LTC insurance (if your agent is now selling cars, they aren't going to be much help).
Get your legal house in order; preferably BEFORE you get sick. Some companies won't talk to anyone other than the insured or someone with Power of Attorney (especially after the new Privacy Laws). If you are ill and in need of care, you most likely won't be in any shape to deal with any of this on your own.
If you are going into a hospital and suspect you may need ongoing care after discharge, it is a good idea to contact your LTC insurance company to get a claim form. Some companies have different forms for Home Care versus Facility Care, so ask to make sure you get the right one.
What if your Claim is denied? A claim may be denied because the person is really not in need of any significant physical care and is just having temporary difficulty with things like housekeeping, shopping, etc. Most policies will pay for these types of services AFTER you qualify for benefits as defined in your policy such as requiring assistance with 2 or more Activities of Daily Living (toileting, transferring, etc.). However, we recommend that you call your insurance company to verify WHY the claim was denied if they didn't explain it thoroughly in a letter. In one instance, we discovered that a generic claim denial form was sent out to a client with a VALID claim. When we followed up we discovered that all that was required was corrected paperwork! This is another way an experienced LTC agent can be of true value to you in real dollars.
If you are unsure of your benefits you may want to ask some of the following questions:

What has my daily benefit grown to (if you purchased inflation protection)? Also find out if your benefit is reduced for Home care or Assisted Living services.
Is my policy a Facility Only, Home Care Only, or a Comprehensive policy?
What is my Benefit Period and what is my Elimination Period.
If you purchased after January 1st, 1997, you may want to confirm if you have a Tax Qualified or Non-Tax Qualified policy. Again, if you have a Tax Qualified policy, then there is a federally mandated requirement that you are expected to need care for more than 90 days before your policy can pay for any services.
If you need Home care confirm what type of care giver is required within the guidelines of your policy. Does it have to be through a home care agency?
How do I file a claim and where does it get sent?

People who purchase comprehensive plans are the happiest. Some people refuse to buy anything but home care insurance believing they will NEVER leave their home. Sadly, these same people find themselves with a useless policy when reality requires that they leave their home for health reasons. Remember, you can use your comprehensive policy exclusively for home care - and still have the safety net of Facility coverage if absolutely necessary.

Insurance companies really do pay! This is a happy relief for all. Most companies have a person they assign to you when you make a claim. We are also available to our clients and their families at claim time to help make sure the paperwork is sent to the right people.

Questions? 800-500-5695

What Happens When I Make a Claim?