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What About Different Types of Policies and Coverage?2. What is a "Tax Qualified" policy? 3. What are "Partnership Programs"? 4. Elimination Period 5. How Can I Protect Myself Against the Rising Cost of care? 1. What is the difference between “Reimbursement,” “Indemnity,” and “Disability” type policies? A reimbursement policy, also known as an “expense-incurred policy,” is the most common type of policy currently purchased. To prove benefit eligibility you are required to meet the ADL or severe cognitive impairment benefit triggers as indicated in your policy. You will receive benefits only when eligible services are received; benefits are paid directly to you or to the provider. This type of coverage pays for the expense incurred or up to your policy’s monetary limit, whichever is less. Unlike a reimbursement (expense-incurred) policy, benefits paid by an indemnity policy are a set dollar amount. Benefit eligibility is generally the same as for a reimbursement policy. When eligibility is established and you are receiving covered long-term care services, the insurance company will pay the pre-determined daily benefit amount indicated in your policy on days you receive a covered service. A disability type policy will pay a flat dollar amount on any day that you are determined to be eligible to receive benefits. Under this plan, provider bills are not needed, and the insurer will often pay out monthly the fixed amount you selected, regardless of whether services have been received to who provides them. Return to Top 2.What is a “Tax Qualified” policy? Policies that are tax qualified meet certain standards as set forth in the Health Insurance Portability and Accountability Act, commonly referred to as “HIPAA,” which Congress passed in 1996. HIPAA ensures that benefits paid from policies that meet its standards are not considered taxable income and that qualified premiums may be deductible as medical expenses if certain thresholds are met. Almost half of all states offer tax incentives for long-term care insurance premiums. Return to Top 3. What are “Partnership Programs?” There are four states that currently have Partnership Programs: California, Connecticut, Indiana, and New York. The Partnership Programs are joint efforts by state governments and the private long-term care insurance industry to create an option to help individuals plan to meet their future long-term care needs without depleting all of their assets to pay for care. Features of the Partnership Program generally vary by state but function in a similar way. If someone purchases state approved Partnership long-term care insurance, and the benefits under that insurance coverage are exhausted, the individual may apply for Medicaid (called “Medi-Cal” in California) coverage. The person may retain all or a portion of the assets he or she would otherwise have to “spend down” if Partnership long-term care insurance had not been purchased. The individual will then, however, generally have to contribute any income to the cost of any long-term care services provided under Medicaid. Consult the Partnership Program in your state for further information about how these partnership programs operate. Return to Top
4. Elimination Period To keep the cost of your premiums lower, most policies become payable only after a period of time called an “elimination period” or a “waiting period,” which is similar to a deductible. These terms generally mean the same thing. This is the period of time during which you must be eligible for benefits (and in certain types of polices you must also be receiving covered services) before your insurance benefits become payable. During this time you will generally continue to pay premiums. Policies with a short or no elimination period are usually more expensive than policies with an extended elimination period. Some companies require that you meet the prescribed elimination period only once in your lifetime. Others require you to meet the prescribed elimination period each time you need long-term care services. Policies may provide different methods for calculating elimination period requirements when you receive home health care. Return to Top 5. How Can I Protect Myself Against the Rising Cost of care? There are four options, at an additional cost, that may help you protect yourself against the increased costs of care in the future. A. Automatic Compound Inflation Option Automatic inflation protection helps keep pace with the future cost of care. This annual increase is based on your compounded DBA. Policies offer the option of automatic inflation increases. Choosing an Automatic Compound Inflation Option will result in a higher DBA than the Automatic Simple Inflation option. B. Automatic Simple Inflation Option The annual increase, for the life of the coverage, is based on the DBA originally purchased. C. Periodic Inflation Protection The premium that you pay when the insurance is purchased pays for the daily benefit amount you initially choose. Opportunities are offered periodically to increase coverage usually without having to provide evidence of good health. In some policies, these offers are only given to people who have not declined a certain number of increase offers. Your premium will increase based on your age at the time each inflation offer is accepted, but it will only increase for the current additional benefit you purchase. D. Future Purchase Option (FPO) This option also offers protection against increases in long-term care costs. It increases your DBA and the remaining amount of your Maximum Lifetime Benefit every few years at an extra cost, as long as you are not eligible for benefits and you don’t decline the increase. In some policies, once you have declined a certain number of increases that have been offered to you, you will not receive other increase offers unless you specifically request an increase in your DBA and pass the insurance company’s underwriting requirements. Return to Top For additional information see the links below: Long-Term Care Insurance-Home Page General Information 1. What is long-term care? 2. Where can I receive long-term care services? 3. What are Activities of Daily Living (ADLs)? What is the Cost of Long-Term Care Services? Paying for Long-Term Care Services 1. How are long-term care services paid? a. Self-Insure b. Medicaid c. Medicare d. Long-Term Care Insurance Is Long-Term Care Insurance Appropriate for You or a Family Member? 1. Who could benefit from purchasing long-term care insurance? 2. What is the right age to purchase long-term care insurance? 3. Is there anyone who should not purchase long-term care insurance? What Are the Costs of Long-Term Care Policies Based On? How to Select a Policy? 1. What decisions do I need to make? 2. How can I protect myself against the rising cost of care? 3. How much coverage is right for me? How Long Can I Expect to Need Coverage? What About Benefits? 1. How do I become eligible to receive benefits? 2. Who determines when I am eligible for benefits? 3. What happens to my benefits if I stop paying my premium? 4. What is a “return of premium on death” benefit? What Else Should I Know? 1. Can I change my mind if I buy a policy? 2. Can my premiums be raised? 3. How can I evaluate a long-term care insurance company? 4. How can I obtain detailed information on long-term care insurance? Return to Top |
| Like other insurance coverage, long-term care insurance policies contain certain exclusions, limitations, reductions of benefits and terms for keeping them in force. For complete details, contact an insurance company offering long-term care insurance. |
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