Long-Term Care Insurance
Long Term Care Insurance
Long-term care insurance covers the cost of personal care, whether in a nursing home or your own residence if the individual is unable to care for his or herself. Key issues to consider include:
• definition of being unable to care for oneself
• types of long care plans
• waiting periods
Definition of Unable to Care for Oneself – This is the key issue in determining when an individual is eligible to collect on the policy. The inability to look after one’s self may arise from either a physical or a mental issue. For a physical disability, most insurance companies have a list of certain activities and when individuals can prove they can no longer perform these tasks, the insured qualifies for the payment. A common standard of when an individual can no longer care for themselves is when they are unable to perform any two of various tasks, such as:
Bathing – the ability to completely bath or shower without the aid of any equipment
Dressing – the ability to dress and undress oneself
Meals – the ability to consume food that has been prepared. This test does not include the ability to prepare meals on their own behalf
Using the Toilet – The skill to get on or off the toilet without the assistance of another individual. This does not restrict the use of specialized equipment
Bladder or Bowel Control
Mobility – The ability to get in and out of a chair, wheelchair or bed. If an individual is able to move around with the use of a walker, cane or similar equipment, they may be considered to be mobile for purposes of the test
A mental impairment raises a number of issues. It is difficult to define since it happens over and a period of time and it may be problematic to convince the insurance company that one has met the criteria laid out in the policy. Mental impairment is a loss of an individual’s capacity to think, reason or remember and therefore unable to provide their own care.
Before purchasing any long-term care policy, it is imperative to understand the insurance provider’s definition of being “unable to provide personal care” and determine what steps the insured must take to satisfy the insurance company that they are eligible to collect.
Types of Plans – Insurance companies offer the following types of long term care plans – income, indemnity and reimbursement plans:
Income Plan – These plans provide a specified amount of income, once the claimant has been classified as eligible to receive payments. Individuals receive a set weekly or monthly amount and are free to use these funds in any manner they choose
Indemnity Plan – Once qualified to receive payments, the individual will receive a set amount to cover a specific service. The claimant must be able to substantiate they used the service
Reimbursement Plan – These plans reimburse the claimant for specific expenses incurred to cover long-term care expenses
Waiting Periods – The waiting period is the time between the dates the individual qualifies and is eligible to receive payments from the plan. Standard waiting times include:
• payments do not start until 90 days has been spent in a long-term care facility or is the recipient of home care
• no payments are received until the individual enters a long-term care facility
• a combination of the two, such as no waiting period for long-term care in a facility, but a 90-day period is required for home care
Conclusion – Since critical care and long-term care insurance are not a common benefit offered by employers, it often represents a significant uninsured risk faced by a family. We recommend individuals consider these types of insurance as a key component of their personal financial plan if they do not have sufficient resources to ensure they receive appropriate care.
