Insurance and Senior Living What Is and Isn't Covered?
More than eight million Americans have purchased long-term care insurance (LTCI) policies to ensure that future or unexpected care needs won't drain their savings or burden their family members.
But many of those people are unsure exactly what that insurance covers when it comes to senior living. Every LTCI policy is different, so it's important to understand exactly what is and isn't covered under your policy from day one.
Consider the Type of LTCI Policy
Today, most LTCI policies sold are comprehensive. They provide a daily benefit to help cover the costs of long-term care when you or your loved one's current health needs trigger a benefit.
The daily benefit under most LTCI policies can be used for assisted living, memory care, and skilled nursing so long as certain health criteria are met. However, it's important to understand what standards must be met to trigger a benefit under your loved one's LTCI policy, and what provider restrictions are in place for qualified senior living communities
Benefit Trigger It's important to understand exactly what criteria your insurer will use to determine long-term care benefit eligibility; a nurse or social worker will usually perform an assessment that's based on activities of daily living and cognitive function to determine eligibility.
Provider Restrictions Look for specific requirements that your insurer has in place for a qualified senior living community's services, staffing, and design; insurers may require that communities have a minimum number of beds or provide 24-hour care, for example.
Medical underwriting is required for most LTCI plans so that insurers can ensure that you or your loved one is in good health at the time that a plan is being purchased. Those who purchase plans a little later in life, or those dealing with medical complications, may be offered a “non-standard” LTCI plan that offers more limited coverage or requires a higher rate. Limitations of non-standard LTCI plans may impact which type of senior living is and isn't covered under a particular policy.
When You Purchased Your LTCI Plan Matters
Some people who purchased LTCI plans in the late 1980s or early 1990s were surprised to find that claims were partially covered or denied “because older policies contain out of date requirements for claiming benefits, and don't reflect changes in long-term care services and providers.”
Some insurers include alternative-plan-of-care clauses in LTCI plans as a workaround. These clauses provide flexibility for coverage of services or care that may not have been available when a policy was purchased. For example, an alternative-plan-of-care clause could enable an insurer to pay for assisted living even if an original policy only outlined coverage for skilled nursing.
Usually the insurer, the beneficiary, and the medical provider must all agree to exercise an alternative-plan-of-care clause. It's important to understand if your LTCI plan has such a clause and, if so, what its terms are.
Other Factors to Consider
There's no doubt that shopping for LTCI can be overwhelming and a little intimidating, but understanding exactly what's covered and when will bring peace of mind to you and your family.
How long your LTCI plan provides coverage, and in what amount, will vary based on your individual plan. Additionally, some insurance plans cap lifetime reimbursements at a specific amount.
Understanding exactly what types of senior living are covered under your LTCI plan, and for how long, will help you ensure that you or your loved one's care needs are met for years to come. Because every LTCI plan is different, it's important for you to understand the particulars of your policy to avoid any surprises.
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