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Components of a Long Term Care Plan
Indemnity - The policy specifies a particular daily benefit which will be paid regardless of what type or amount of expenses are incurred. It is important to note that any amount in excess of $270 (for the year 2008) of daily benefit is considered income and would be subject to income tax.
Reimbursement - The policy reimburses for qualified Long Term Care services up to a selected maximum daily benefit. Payments can be made to the insured or to the provider. The reimbursement policies set up a "pool of money", determined by the selected benefit amount and benefit period, from which expenses are paid. It may be possible for the benefits to be paid beyond the selected benefit period if the amount of payments are less that the policy's total value at the end of the stated benefit period (see "Benefit Amount" below). For example, if you have a $150 per day allowance and you are charged $100 for services, the remaining $50 is retained as part of the "pool of funds". Benefits are all eligible for deductibility under medical expenses.
Benefit Amount - The maximum fixed dollar amount the policy will pay for each day you need care. This figure determines the policy's total value. For example, if you purchase a policy with a $150 daily benefit for a three year benefit period, then policy's value would be $164,250 ($150 x 365 days x 3).
Benefit Period - The length of time the policy will pay for covered services. The average length of stay in a nursing home is between 2 and 3 years according to the Health Insurance Association of America. The available benefit periods offered by the various insurance companies include 2, 3, 4, 5, 6, 10 years or a lifetime (unlimited) benefit.
Elimination Period - The number of days that you pay for covered services before the policy pays. It is important that the policy contain a one-time only elimination period and a lifetime accumulation feature. Some carriers require you to accumulate the one-time only elimination period in 180 or 730 days.
Benefit Triggers - Most policies require that a licensed health care professional, such as a physician, nurse, case manager or gerontologist certify the insured needs "hands on" help, or supervisory "stand by" assistance, or directional "reminding" to perform at least 2 out of 6 Activities of Daily Living. These include:
Dressing - The ability to put on and take off all garments and medically necessary braces or artificial limbs usually worn and to fasten and unfasten them.
Eating/Feeding- The ability to get food into the body from a receptacle or by a feeding tube or intravenously.
Toileting - Getting to, from, on or off the toilet and performing personal hygiene.
Transferring - Moving in and out of a chair or bed.
Bathing - Washing by sponge bath or washing in either a shower or tub including the task of getting in or out of the shower or tub.
Continence - Maintaining control of bladder and bowel functions, or if unable to do this, performing associated personal hygiene (for example, caring for catheter or colostomy bag).
Levels of Care - A good long term care policy will cover all levels of care, including custodial or personal care in various settings. Custodial care can be given in nursing homes, adult day centers, or at home. It helps you with the basic activities of daily living such as bathing, eating, dressing, continence, toileting, transferring and ambulating. People without medical training can give custodial care but under the supervision of a physician. This care may involve preparation of meals, help with taking medicines, and other routine activities.
The various settings include:
Nursing Home Facilities - Residential sites for people who need daily medical care. States license these facilities and the federal government certifies them as qualified to receive Medicare patients. Expenses incurred at noncertified institutions are not covered under Medicare.
Assisted Living Facilities - An alternate care facility is one that provides 24-hour a day personal care and custodial services by a trained staff to those who suffer cognitive impairment or require help with Activities of Daily Living. It has supervision to the extent required by law. It provides 3 meals a day and accommodates special dietary needs. It has procedures for procuring the services of a doctor or nurse to furnish medical care in case of emergency. It has appropriate methods and procedures to assist in administering prescribed drugs. The "Assisted Living Facility" may be described as the following: Alternate Care Facility; Residential Care Facility; Alzheimer's Facility; Adult Foster Home; Domiciliary Care Facility.
Adult Day Care - An organized social, recreational and/or rehabilitative service that provides care in the daytime for persons who cannot remain alone. It includes health and custodial care, and other related support. This care - an alternative to care in the home or in an institution - is given in specified centers on a less than 24-hour basis.
Home Health Care - Services provided by registered or licensed practical nurses, vocational nurses, occupational, physical and speech therapists, licensed social workers, nurses aides, home health aides, and nutritionists. Many policies offer Home Health Care as an optional rider or offer options to select a benefit equal to a percentage of Nursing Home Care benefits. For example, if you have $150 of Nursing Home Benefits, you may elect to limit the Home Health Care benefit to 50% or 80% of that amount. Services provided by family members are generally not covered.
Guaranteed Renewable - The insurer guarantees you the chance to renew your policy. This is not a guarantee that premiums will not increase. If rates should increase, they must increase for all policyholders in your state and be approved by the insurance commissioner.
Waiver of Premium - This provision lets you stop paying premiums once you are receiving benefits. There may be restrictions within the policy such as a requirement to be in a nursing home or receiving Home Care benefits for a set period of time (60 or 90 days is standard) before premiums are waived.
No prior hospitalization required in order to receive benefits.
Spousal Discounts
Preferred Health Discounts
Deductibility of Premiums - Premiums are treated like other health insurance and medical expenses.
Inflation Adjustment - This increases the benefit amount to try to keep Pace with inflation. The inflation options usually include CPI, 5% Simple or 5% Compound, and Deferred Purchase Options. Generally the Simple and Compound benefits are built into the original policy's premium so it remains level. CPI or Deferred Purchase Options generate increases in annual premiums when the coverage increases. (See Inflation Rate Comparison)
Non-Forfeiture Benefit - If you stop making premium payments, the policy will provide a reduced amount or a shortened benefit period based on the amount of premiums paid.
Paid-Up Survivor Benefit - If the policies on the husband and wife have been in force for 10 years, and no claim for benefits has been made, and one spouse dies, the premiums are waived for the surviving spouse.
Restoration of Benefits - Benefits are restored if the insured has received benefits and the remains off claim for a period of 180 days.
Shared Care Benefit - If one spouse uses up his or her policy value, he or she may tap into the other spouse's policy benefits.
Alternative Plan of Care (some policies may include this under Home Health Care) - Specifically designed plan of care to meet your unique situation not met by normal providers, such as improvement in the home. Generally agreed to in writing by the insured, insurance company, and health care professional and the cost is lower than that of a nursing home.
Enhanced Elimination Period (John Hancock) - For each day of Home Health Care for which you receive benefits, John Hancock will credit you With 7 days to enable you to help you fulfill the elimination period faster. (This is built into the UNUM policy; for GE Capital, there is no elimination period for Home Health Care if you utilize the Privilege Care Coordinator Benefit.)
See more detailed riders:
JOHN HANCOCK CUSTOM CARE II
GE CAPITAL PRIVILEGED CHOICE
MET LIFE IDEAL PLAN