How does long term care insurance work? What does it pay for? Who does it pay for? Will I regret paying the money?
Unlike traditional health insurance or medicare, Long – term care insurance is designed to cover long –term services and support, including personal and custodial care in a variety of setting (home, community organization, or facility). Long – term care insurance (LTC insurance) policies reimburse policyholders a daily amount (pre-selected limit) for services to assist them with Activities of daily living (ADL) such as bathing, dressing, or eating.
The cost of LTC insurance is based on:
- How old you are when you buy
- The maximum amount a policy will pay per day
- The maximum number of days (years)
- Optional benefits that increase with inflation
When do you buy? The best age to apply is in your mid-50s. You can lock in your good health today. If you are in poor health, over 70, or already receiving Long term care services you may not qualify for LTC insurance as most policies require medical underwriting.
Who needs LTC insurance? “For anyone 65 and older, the odds are not in your favor. Statictics show 70% of those who reach 65 will need Long-term care. With long-term care costing as much as $250 a day, it doesn’t take long to completely deplete a lifetime of saving—even if you’re “lucky” enough to only need it for a relatively short period of time.” Mark Meiners.
When do you use LTC insurance?
The first concept to understand is the term ADL, or Activities of daily living. ADL is short hand for routine daily tasks like, bathing, dressing ,eating, preparing meals.
The IRS requires tax qualified LTC insurance policies to use the following:
- Continence: Ability to hold urine
- Transferring: The ability to get out of bed or chair independently
- Toileting: The ability to toilet oneself
- Dressing
- Bathing
- Eating
Absent a cognitive impairment, such as dementia or Alzheimers, the IRS requires policies initiate benefits if the insured is unable to perform any two of these ADL’s without assistance.
How do you submit a claim?
Call as soon as you suspect a disability, before you come home from the hospital or rehab. Call the insurance company. Most policies have some restrictions on when they start, generally a nurse or physican does an evalutation, determines two ADL restrictions and a waiting period of 30 to 120 days kicks in before benefits are paid. Most policies require a caregiver from a licensed home care agency. In Illinois that is a licensed Home Servies Agency.
Richard E. Ueberfluss
