Long Term Care Insurance…Use It or Lose It?

It might be hard to imagine now, but chances are you’ll need some help taking care of yourself later in life. The big question is: How will you pay for care? Buying long term care insurance ahead of time is one way many Americans prepare for these expenses.

Long-term care refers to a host of services that aren’t covered by regular health insurance, including assistance with routine daily activities: bathing, dressing, or getting in and out of bed. When you or an aging loved one needs assistance at home to continue living safely and independently or needs to move into a senior living facility, long-term care insurance (LTCI) can help make care more affordable.

When to file a LTCI claim?

So…if you are one of the 7.5 million Americans with some form of long-term care insurance, when is it time to use the policy and file a claim? There are several considerations before submitting a claim to the long-term care insurance company.

What conditions must be met?

First, a policyholder must meet certain conditions to become eligible for long-term care benefits. Most policies require a policyholder to need assistance with at least two activities of daily living (ADLs) to qualify. Corey Rieck, founder of The Long Term Care Planning Group, says “it’s important to engage the medical professional.  Policies will typically require a doctor to certify that services are medically necessary for the policyholder.”  Each insurance company and individual policy handles these criteria differently, especially for policyholders with cognitive impairment.

What exactly are the benefits?

Second, how much is the benefit and how long will the benefits last? Benefit limits differ between policies. Some policies state a maximum benefit limit in years (i.e., one year, three years or even the remainder of the policyholder’s lifetime), while others state a maximum total dollar amount that will be paid. It is important to understand these particulars.

Elimination period?

Lastly, it is important to note there is often an “elimination period” that needs to be met. Some policies specify an elimination period where the policyholder must receive paid care or pay for services out of pocket for the duration of said period before coverage kicks in.

Consider this:  Elaine is an 87-year-old widow. She has been diagnosed with chronic emphysema, has poor mobility, and lives alone. She now requires daily assistance with bathing and dressing. Her husband purchased a LTC insurance policy with a $250,000 maximum benefit through his employer 30 years ago, but Elaine is hesitant to use it. What if it runs out? Her children are encouraging Elaine to initiate a claim. “If you don’t use it, you lose it,” they say. This may or may not be true. Some policies actually have a Return of Premium component. “Return of Premium refers to a policy where you get your money back either in full, or in part if no other benefits are used,” says Rieck. “It is vital to speak with your agent in order to understand your particular policy.”

Another example:  Toby is 76 years old and has a LTC policy that he purchased twenty years ago.  Toby has just been diagnosed with mild Alzheimer’s disease and his benefit only lasts three years. It may be wise to let some time pass before filing a claim because individuals with dementia can live for many years. As his condition progresses, he will require more intensive care that can be expensive. Filing a claim “too early” might leave him with no coverage later when his needs have increased.

Managing long-term care insurance claims is not easy. Knowing what benefits are available and finding an informed care provider who can maximize that coverage will help to choose the best plan of care.  More questions?  Reach out to our office at 404-843-0121 or via our website at www.hurleyeclaw.com for more information.

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