How to Get the Most Out of Your Long Term Care Insurance Policy
After you purchase long-term care insurance, you should receive the policy documents, including an outline of coverage, disclosure forms, definitions of policy terms, endorsements, and related documents. You may have a certain number of days after the date of purchase to return or cancel the policy and receive a full or partial refund of the premium. Refer to your LTC policy for cancellation terms. It is extremely important to read all documentation provided by the insurance company or agent, especially the fine print. If you fail to read your long term care policy immediately upon receiving it, you could be in for some costly surprises later when you attempt to use the benefits.
Every LTC insurance policy contains terms, conditions, limitations, and exclusions that affect the type and amount of benefits available under the policy. Depending on how your policy language is worded, you may or may not be eligible for certain services or items you believe are covered by the policy. Most people with long term care insurance pay their premiums for many years before they need nursing home care. Don’t wait until you require long term care to learn whether your policy provides the coverage you need.
What To Do If You Have Questions About Your Long Term Care Policy
If you purchased long-term care insurance and have questions about the terms and conditions in the policy, disclosures, application or other written materials provided by the insurer, there are several ways you can get more information. You can contact the insurance company or the agent that sold you the policy. You can also contact the Department of Insurance or Department of Aging in your state. These state agencies have websites that may provide answers to your questions. If you have a legal question about your long term care insurance, consult an elder law attorney.
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Important Provisions in Long Term Care Policies
While long term care policies vary by insurance provider, here are some general provisions to look for in your policy:
1. Guaranteed Renewable. Is your policy guaranteed renewable for life? Make sure your LTC policy specifically states that it is guaranteed renewable for life, giving you the right to continue the policy as long as you pay the premiums on time.
2. Eligibility for Payment of Benefits. This is the section of your policy that outlines the conditions you must meet in order for benefits to be paid out under the policy. The title of this section in the policy will vary from company to company. Look for language that discusses the requirements an insured must meet to be eligible for nursing home expenses or home health care expenses to be covered. For example, the policy may say the insured must be chronically ill for a certain number of days, that a physician must provide a written statement about the insured’s condition, and that the insured must be unable to perform certain activities of daily living. When reviewing the eligibility for payment of benefits section, consider whether the conditions you must meet seem reasonable based upon how much you are paying for the policy and the other alternatives for covering your long term care expenses.
3. Covered Services. To determine the types of long term care services you can expect to be paid for or reimbursed under your policy, review the covered services section of your policy. For example, if you want the option of having a private nurse, home health aide or homemaker to assist you in your home, review this section to determine if the service is covered. If the services you prefer to use are not listed as being covered, contact your insurance agent for more information.
4. Limitations and Exclusions. Read all limitations and exclusions provisions thoroughly. Your policy may exclude services and items you assumed would be covered. For example, a common exclusion in LTC policies is that services performed by a member of the insured’s immediate family are not covered. The policy may also exclude services provided to the insured outside the United States. If the limitations and exclusions language indicates benefits will not be paid for services you expected to be covered, discuss the issue with your insurance agent.
5. Inflation Protection. Because the cost of nursing home and other long-term care services will increase in the future, what seems like a reasonable daily benefit amount under your current LTC policy may be insufficient to cover even the most basic level of services ten or twenty years from now. Adding an inflation protection rider to your policy may provide for an increase in your benefit amount over time without increasing your insurance premiums. Most long term care insurance companies offer an inflation protection rider. While this type of rider will increase the cost of your annual premiums, failure to purchase inflation protection may severely limit the benefits you derive from the policy when you need to use it.
6. Diseases and Other Health Conditions. If your long term care insurance limits or excludes coverage for preexisting conditions, mental disorders, nervous conditions, or degenerative diseases such as Alzheimers Disease, that you begin to suffer after you are accepted for coverage, this is a serious red flag regarding the policy. Long term care insurance should cover these types of conditions if they arise after the effective date of your policy. If you find these types of diseases and other health conditions are specifically excluded in your policy, consult an elder law attorney or another trusted advisor.
Read the fine print in your LTC policy and any other notices, letters or disclosures you receive from the insurer. If you have questions or concerns about any language in these documents, get them answered right away. Do not wait until you need nursing home care or other services.
