What is an LTC Policy : Selecting the Right Coverage

Long-term care (LTC) insurance is coverage intended to pay for long-term care when insured's are stricken with debilitative disease or require LTC in their retirement years. While coverage costs can be relatively reasonable, premiums costs can be almost unaffordable when consumers attempt to secure insurance late into their retirement or they have been already diagnosed with a debilitating disease

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Long Term Care Insurance Policy Benefits

Long term care insurance benefits the individual who is resonsible for the payment of the health. Statistically, without LTC insurance, individuals and their families pay about one-fourth of all nursing home costs out-of-pocket. In addition, long-term care isn't usually provided in the health insurance you may through your employer.

Generally, neither Medicare nor Medicaid cover long-term care. People over 65 and some younger people with disabilities have health coverage through the federal Medicare program. Medicare pays only about 12 percent for short-term skilled nursing home care following hospitalization. Medicare also pays for some skilled at-home care, but only for short-term unstable medical conditions and not for the ongoing assistance that many elderly, ill, or injured people need.

Medicare supplement insurance (often called Medigap or MedSupp) is private insurance that helps cover some of the gaps in Medicare coverage. While these policies help pay the deductible for hospitals and doctors, coinsurance payments, or what Medicare considers excess physician charges, they do not cover long-term care.

The National Association of Insurance Commissioners has developed standards that protect consumers. The following is a suggested listing by the U.S. Government on what you should look for in your Long-term care insurancy policy:

• At least one year of nursing home or home health care coverage, including intermediate and custodial care. Nursing home or home health care benefits should not be limited primarily to skilled care.

• Coverage for Alzheimer's disease, should the policyholder develops it after purchasing the policy.

• An inflation protection option. The policy should offer a choice among:

  • automatically increasing the initial benefit level on an annual basis,

  • a guaranteed right to increase benefit levels periodically without providing evidence of insurabili

• An "outline of coverage" that systematically describes the policy's benefits, limitations, and exclusions, and also allows you to compare it with others. A long-term care insurance shopper's guide that helps you decide whether long-term care insurance is appropriate for you. Your company or agent should provide both of these.

• A guarantee that the policy cannot be canceled, nonrenewed, or otherwise terminated because you get older or suffer deterioration in physical or mental health.
  The right to return the policy within 30 days after you have purchased the policy and to receive a premium refund.

• No requirement that policyholders:

  • first be hospitalized in order to receive nursing home benefits or home health care benefits,

  • first receive skilled nursing home care before receiving intermediate or custodial nursing home care,

  • first receive nursing home care before receiving benefits for home health care.

• Benefits Period
  How long benefits should last depends on what you can afford to pay in premiums over the years. Buy the longest benefit period that you can reasonably afford, 5 years minimum.
  

• Inflation Protection
  A benefit that keeps the policy’s buying power in pace with the future cost of health care. There are 3 types of inflation protection: automatic 5% annual compounding; automatic 5% simple interest; and an option to buy more coverage at periodic intervals without reapplying.

Learn More...

Long Term Care Insurance Policy Optional Benefits

Long Term Care Insurance Policy Benefit Triggers

Typical Exclusions in a Long Term Care Policy

Long Term Care Insurance Policy and Tax Deductions

Group Long Term Care Insurance Policy

Inflation Protection and Long Term Care Insurance