Long-Term Care Insurance: The Basics

Now that we are all living longer, there comes a time when an aging parent, spouse or sibling will begin to need some help living safely and independently in their home or may even need to move into a assisted living facility. Often long-term care insurance (LTCI) can help offset the costs of having a caregiver help with day to day chores and activities. If someone who needs care has  has a current LTCI policy, there are some very important steps to be taken in order to be able to successfully file a claim. Remember, insurance companies are in the business of not having to pay claims unless forced too.

So with that said, obtaining your benefits can be challenging, especially when family member are already feeling overwhelmed. Family members may not even know if their loved ones have LTCI coverage. If you suspect your care recipient purchased a long-term care insurance policy, you’ll need to do some searching. Start by looking for a certificate of coverage or any records of premium payments. If you find evidence of a LTCI policy, call the insurance company to see if the policy is still in-force. If it is, the next step is to clarify all the specifics of their coverage.

What to do before filing a LTCI claim

It is vitally important to gather all pertinent information about your LTCI policy before you submit your first claim. All the information below can be found within your policy documents, and if not, you can call your insurer and ask for an agent to review them with you. It might also be helpful to have someone, an adult child, friend, accountant, lawyer, who can help navigate this process. Some private duty agencies will offer to call the insurance company for or with you to help iron out coverage and payment details if you are looking to hire a in-home caregiver. You will need to provide a signed authorization form in order to give any agency permission to speak with the insurance company on your or your family’s behalf. Below are 5 items that you should have handy when you are ready to file a claim.

How much does the policy pay out and when?

LTCI policies come in a variety of payouts methods and amounts. Some pay out on a $20, $40, $80 or $120 per day rate. Some have a weekly or monthly rate, and others have no cap, just a maximum amount of coverage over a certain period of time. See below. These  all vary by policy and insurer. Knowing how much you will get reimbursed in advance, will help you determine how much care you can afford and for how long.

How long, or how much will the policy pay out?

This is really the important part, how much money and for how long can you expect care? Some policies state a maximum benefit limit in years (i.e., one year, three years, five years or even the remainder of the policyholder’s lifetime), while others state a maximum total dollar amount that can be claimed or reimbursed. Others have a combination of both. Depending on the amount of time and money involved, you may be faced with having to let some time pass before filing a claim. For example, individuals with dementia can live for many years. As their condition progresses, they will require more intensive care that can be very expensive. Filing a claim “too early” might leave you with no coverage later on when the need for caregiving is most needed. Unless they (or their family members) can afford to pay out of pocket, you might be forced to use Medicaid to cover the remaining long-term care.

What triggers a benefit to be paid?

A policyholder must meet certain conditions or “benefit triggers” 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. Be sure to clarify whether stand-by assistance is sufficient to trigger benefits or if the policyholder must require actual hands-on assistance with ADLs. Some policies require a doctor to certify that long-term care services are medically necessary for the policyholder before they will pay benefits. Each insurance company and individual policy handles these criteria differently, especially for policyholders with cognitive impairment.

What are the types of care covered in the policy?

Does the policy cover in-home care, and what level of services qualify? Does the policy only cover skilled nursing care, or are custodial care services included, too? If care will be provided in a facility like a nursing home or an assisted living community, is the specific facility an eligible care provider under the policy? Some policies will cover home modifications or even pay certain family members to provide care for the policyholder. There are many levels and types of elder care available, so it is crucial to know which of those included in a senior’s care plan are eligible for coverage.

Is There a Waiver of Premium?

Most policies contain a premium waiver clause. Once a claim is filed and approved, premiums are waived and no longer have to be paid. This may take effect once the first benefit has been paid, or after benefits have been paid for a certain number of days. Long-term care insurance premiums typically increase every year and can be very expensive, so be sure to check if this applies.

Is There an Elimination Period?

Like a deductible on health insurance, this is usually a period of time (instead of a set monetary amount) during which care costs will have to be paid for out of pocket before coverage kicks in. According to LongTermCare.gov, “Some policies specify that in order to satisfy an elimination period, the policyholder must receive paid care or pay for services out of pocket for the duration of said period.” Some plans have a zero-day elimination period so benefits can begin immediately, but others may have a 60-day, 90-day or even 120-day requirement. If a policy has a longer elimination period, a considerable sum of money may still have to be paid out of pocket to begin coverage.

Are There Coverage Exclusions?

Many policies will not cover care needs that result from drug and alcohol abuse, mental health disorders or self-inflicted injuries. Make sure your loved one’s health conditions do not prevent them from receiving the benefits they paid into.

Is There a Death Benefit?

A death benefit is a lump-sum payment to a policyholder’s chosen beneficiary. Combination long-term care insurance policies with death benefits have only become popular in recent years, so if a policy was purchased some time ago, it probably does not have this feature. This means that if the policy is not used, the benefit is lost. Medicare does not cover the costs of long-term care, so it is important to take advantage of LTCI benefits if they are available.

5 Documents Needed to File a Long-Term Care Insurance Claim

Once all the above questions have been answered, the policyholder and their family can make an informed decision about care options. When you are ready to file a claim for long-term care insurance benefits, you will need to obtain and fill out an initial claim “packet” or claim initiation kit.

Each company’s insurance claim forms will be different, and some even make their forms available online. The following components may be combined or have different names, but a claim packet will typically include the following five items.

Policyholder Statement

Also known as a claimant’s statement, individual statement, insured’s statement or care support history, this set of forms will require basic information about the policyholder (e.g., name, address, phone number, date of birth, policy number). It will also ask for explanations regarding the reasons for submitting the claim, including which activities of daily living help is needed with and how long assistance will be required. This component usually includes sections related to hospitalization and medical history as well. The policyholder (or their legal representative/agent under power of attorney) must sign this multi-page statement.

Attending Physician Statement

This form is completed by the policyholder’s primary care physician (or the doctor at their long-term care facility) and verifies that the care they require is medically necessary. The physician may need to attach test results, office notes, medical records and other supporting documentation to this statement.

Nursing Assessment and Plan of Care

Most insurance companies will not approve a long-term care insurance claim without a nursing assessment and/or a prescribed plan of care. Sometimes these components will be included in the physician’s statement mentioned above. The policyholder’s care provider should have a nurse on staff who can conduct and write up this initial assessment, which will include vital sign measurements, demographic information and medical history. The nurse will also complete the care plan, which describes the type of care required in detail. A physician, licensed practical nurse (LPN), or social worker may have to sign to certify this information is accurate.

Provider Statement

If the policyholder is currently receiving long-term care services, each care provider (e.g., skilled nursing facility, assisted living community, in-home care company) will need to complete and sign these forms to verify that it is equipped to provide the services detailed in the plan of care. Providers will need to submit proof of proper licensure, certification, etc. If the LTCI policy includes an elimination period, invoices from current care providers must also be submitted to ensure these days of care count toward the waiting period needed to begin benefits.

Authorization to Release Information

This form ensures compliance with the Health Insurance Portability and Accountability Act (HIPAA) and permits the insurance company to collect health care documentation in order to process the policyholder’s claim. The policyholder or their legal representative must sign this form. If someone is signing this release on the policyholder’s behalf, a copy of their power of attorney (POA) or guardianship documentation must be included.

How Long Does It Take to Receive a LTCI Claim Determination?

Once all the necessary forms and paperwork are submitted to the insurance company, a care coordinator or employee with the claims department will typically call the policyholder or their legal representative for a telephone interview about the information that was provided. From there, a complete claim should be approved or denied within 30 to 45 business days. If the company needs additional information or is unable to reach a decision, a representative should reach out to discuss the issue.

Managing long-term care insurance claims is not easy. Knowing what benefits are available to an aging loved one and finding an informed care provider who can maximize that coverage will help your family choose the best plan of care.