Long Term Care Policy Benefits

Be an Expert When you Discuss Long Term Care Policy Benefits

Long term care insurance policies are often complicated and use confusing terminology. To compound things, many were written years ago as “nursing home policies” before the explosion of home health care and in home care. While the carriers have added options for home and community based care coverage (in-home care, and assisted living), policyholders may not have added these provider benefit plans.

Today, only a small percentage of seniors use their nursing home benefit, and in home care is a leading source of claims. It is critical to review the policy, call the agent, and insurer to verify benefit eligibility. We are happy to help you understand and apply for long term care benefits for in home care.

When talking to your insurance agent or insurance carrier make sure you:

Understand the typical areas of coverage and verify you have benefit coverage for non-medical in home care/personal care services:

  1. Nursing Home – does not cover non-medical in home care services
  2. Home Health Care – may or may not cover non-medical in home care services
  3. Home and Community Care Providers – usually covers non-medical in home care services and assisted living facilities

More about coverage types

If a policy has a Home and Community Care Providers benefit description you should breathe a sigh of relief. It is one of the more current policies and you will usually find personal care services, or in home assistance for activities of daily living, custodial care, or something similar described in this section, and will normally have benefits for in home care–as long as it was included in the premium.

If a policy has a Home Health Care benefit, and no separate benefit description for “Home and Community Based Care”, “In Home Care”, or something similar, there may not be non-medical home care benefits.

Long term care policies that offer the benefit of “personal care services” only through a “licensed home health care agency” inadvertently deny access to personal care services (non-medical in-home care).  It was never the intention of long term care insurers to restrict access to the benefit through this requirement, but many do. If this is the case for you, ask to talk to the supervisor or director of claims management, and explain you have a right to have the personal care services and not have your benefits unreasonably withheld.

Questions to Ask Your Agent or Insurer

Know your benefits and policy restrictions and limits. Some policies provide lower benefits for home care services than long term care facilities.

  • Lifetime maximum benefit
  • Do you have inflation protection?
  • Inflation protection annual adjustment percent
  • Inflation protection adjustment date
  • Monthly benefit limit
  • Daily benefit limit
  • Claim period limits
  • Exclusion period length
  • Is Exclusion period based on calendar days or days of service
  • Does it cover non-medical home caregivers provided by home care agencies that are not home health care agencies?
  • Does it cover and independent caregivers
  • What documentation is required to approve claims for the services of home care agencies
  • What documentation is required to approve claims for the services of independent providers
  • Do they accept a doctor’s validation for the need for home care services, or require their own nurse assessment.
  • How long will it take for the insurer to issue payment upon receipt of a claim
  • If a claim is denied or adjusted, what is the appeal process

What is the life time benefit limit?

That is the total benefit you are entitled to. Some policies are unlimited, but most have maximum benefit limits.

Tip: Be aware of policies that have time limits for the receipt of benefits, because you many not actually receive your lifetime benefits if the benefit period expires before all the benefits have been drawn down. For example, a policy may have a $300,000 lifetime benefit paid over three years of claims. If you were frugal and received $150,000 in benefit payments over those three years, half of your lifetime benefit may be forfeited.

What are the monthly benefit limits?

Policies are usually structured to provide a specified benefit per month and will not pay amounts exceeding the limit.

Tip: Be aware that many policies also impose a daily benefit limit on top of the monthly benefit limit and will only pay 1/30th of the benefit limit each day. To reach the monthly limit, a claimant must receive home care services for 30 days each month. If there is no daily limit, claimants have much more caregiver scheduling flexibility and ability to maximize benefit payments.

Are there weekly, or daily benefit limits?

Most insurers have a specified daily benefit maximum that cannot be exceeded each day. Usually 1/30th of the monthly limit. A few have only a monthly limit that allows you to use as much of the benefit within the month on any given, day but will not pay more than the monthly limit. These provide more scheduling freedom. For example, a beneficiary can spend more on certain days and less on others without worrying about daily maximums.

How long is a benefit period?

Some policies will allow you to draw benefits up to 3 calendar years. Then–even if you have not reached the benefit maximum–that is all there is. If the policy bases the benefit period on days of service, that is better, and some policies allow you to access benefits until your lifetime limit is reached. Insurers that use daily limits in conjunction with a benefit time limit based on calendar days rarely pay out the maximum lifetime benefit, unless the policyholder reaches their daily limit every day of the year over the benefit period.

What is the “exclusion period”?

It’s similar to a deductible and is the number of days from the first day a caregiver provides assistance to the end of the exclusion period. The insurer does not pay benefits during this period. Make sure you ask if it is based on “days of service” or “calendar days”. A thirty day exclusion period based on calendar days is satisfied once thirty days has elapsed from the first day of service, regardless of the number of days the caregiver actually worked. A thirty day exclusion based on “days of service” means assistance must be provided by a caregiver on 30 separate days. So, a caregiver providing assistance 3 days a week will take 10 weeks to meet the exclusion criteria. Typical exclusion periods are 0, 15, 30, 45, 60, and 90 days

Is there any waiver of the exclusion period?

Most policies waive the exclusion if the beneficiary is cognitively impaired or enrolled in a hospice program.

Do they require their own nurse to assess the beneficiary to obtain an authorization for home care services?

More insurers are requiring this, and sometimes scheduling this assessment can delay benefits. Schedule as soon as possible. However, most insurers will cover services received prior to the nurse assessment and count them toward any exclusionary period, pending the assessment outcome.

When should you file a claim?

Will they include days of care provided prior to the date the claim is filed in the exclusionary period? In most cases, yes! Do file your claim as soon as possible, and confirm you benefit eligibility with the agent and/or insurer. You do not need to wait to start receiving home care services. A doctor will need to validate your need and/or a nurse assessment, but that can happen after you start receiving care at home.

What paperwork is required to be submitted with a claim?

After the claim is authorized, the insurer will require invoices with notes indicating at least two activities of daily living were provided each day of services, and proof of payment. We can streamline the ongoing claims information submission process with electronic claims submissions, so you receive your benefits quickly.

What are the requirements of a home care agency providing a caregiver?

The agency must be a legal provider of home care services or home care aides in the state it operates. The insurer may authorize the company, and/or individual home care aides provided, referred or arranged by the company.

What is the number of activities of daily living or other services required for a qualified benefit claim?

Most insurers require that the policyholder receive assistance with at least two activities of daily living (sometimes three). If cognitive impairment is diagnosed by a physician, there is no requirement for assistance with activities of daily living; cognitive impairment is enough to justify the claim. On rare occasions, only one activity of daily living in conjunction with “instrumental activities of daily living” is sufficient.

What are activities of daily living?

There are six Activities of Daily Living (ADLs): bathing, dressing, toileting, feeding, ambulation assistance, and transfers (wheel chair to/from a bed or chair).  Long term care insurers generally require a claimant to receive assistance with at least two for each day of care. Please consult your policy and discuss with your insurer for information specific to your coverage.

Tip: Try to obtain authorization for as many of the six ADLs as possible, even if rarely needed. Insurers often authorize fewer than the six ADLs, so if one authorized ADL is provided with an unauthorized ADL for a total of two ADLs on the claim, it can be denied because only one of the authorized ADLs was provided.

Is the premium payment waived when collecting benefits?

Yes, and it is another reason to file claims as soon as possible! Carriers waive the premium when a policyholder is receiving benefits. Please consult your policy and discuss with your insurer for information specific to your coverage.

How long is a claim authorization valid?

Some insurers may require a new authorization for benefits periodically, usually on an annual basis. Increasingly, we are seeing 6 month re-authorizations. Your policy probably does not explain reauthorizations, so please discuss this with your insurer.

If claims were stopped, how long will the initial authorization be valid?

Some insurers will cancel a claim authorization if a claim has not been submitted for a certain period, typically every 6 months. If your authorization terminates, or is cancelled, you will have to initiate a new claim, and may be subject to the exclusionary period again. 


Tips About Buying Long Term Care Insurance

Here are some tips to help you get the most out of your premium dollars.

  • Start looking in your 50’s or 60’s before premiums rise sharply, or your health worsens to rule you out of decent coverage.
  • As traditional LTC insurance is hiking rates to cover increased risk exposure, hybrid policies are taking hold. Whole life insurance policies that you can draw from to pay for long term care offer several benefits. Premiums locks reduce the risk of rate hikes, and if the long term care benefit is not used, it can be passed down to your heirs. It’s also easier to qualify for coverage for older people. The premium cost is more than traditional LTC coverage, so if premium cost is your main concern look to traditional LTC coverage.
  • Elect the annual inflation protection. Long term care costs are rising fast. A policy with a $200 daily benefit today will grow to $415/day in 15 years (5% inflation protection).
  • A shorter exclusion period is better, of course. If you are discharged from a hospital and need home care services, your need is highest right after discharge. If your recovery period is 30 days, but your policy has a 60 day exclusion period, you won’t be able to access your benefits. There is a reason the length of the exclusion periods significantly affect premium rates.
  • Calendar day exclusionary periods are better than exclusionary periods based on dates of service.
  • In a lifetime, men on average will need 1.5 years of long term care and women will use 2.5 years (AARP, 2017), and 48% of people receive long term care for less than a year (AARP, 2018). So, if you are male you might elect to have a shorter claims period in exchange for a shorter exclusionary period and/or inflation protection.
  • Use an independent agent that offers a variety of Life and LTC insurance carriers so you can compare a number of offerings.

A Better Living Home Care Agency makes it easy to get started with senior home care services in the Sacramento area.

Type of Long Term Care Monthly Median Costs: Sacramento Area, CA
Source: Genworth Cost of Care Survey, 2020
In-Home Care (20 hrs/wk) $2,665
In-Home Care (40 hrs/wk) $5,330
Assisted Living Facility $5,395
Nursing Home (Semi-Private Room) $9,946
Nursing Home (Private Room) $13,688
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