Most people receiving Medicare Parts A&B probably don’t realize that it doesn’t cover the costs of a live-in nursing home. Although Medicare pays some costs for Home Health Care, it does not cover the expense of admission to a full-care nursing home. In order to protect themselves from the high daily costs of full-time nursing care, Long-Term Care insurance is available to those looking for protection against increasing costs of elderly care.
Although Long-Term Care insurance is very different from disability insurance, it is still “risk managed” to “not pay” benefits except under specific criteria written in the Long-Term Care contract. There are basically two kinds of LTC insurance: 1) Plans that pay a fixed daily rate and 2) Plans that compensate for actual costs of service paid, particularly if the nursing care is provided at home. Nearly all LTC insurance Plans use inflation factors to keep the actual benefit paid commensurate with present value dollars. LTC insurance is very expensive, which is why not everyone is able to afford the premium even though 85% of seniors will spend some time in a nursing home, or requiring home health care on a regular basis.
LTC insurance defines “disability” when the insured is restricted in at least two (or more) Activities of Daily Living, or can prove cognitive disability requiring regular assistance and supervision. While there are many versions of “disability definition” in LTC contracts, these two are the most popular.
Insurance companies require the completion of paperwork signed by the treating physician recommending full-time nursing care. In addition, specific “needs” must be defined by the doctor, such as assistance provided with dressing, eating, transferring, bathing, food preparation etc. These directions are given to agencies such as Traveling Angels, for example, who can then write “treatment” plans for each day of service.
All receipts for home nursing care must be provided to the insurer on a regular basis before any benefits are received. In the case of living in a nursing home, once the required paperwork is submitted, bills are paid directly to the nursing home.
As I mentioned, LTC Plans usually include an adjusted inflation factor that keeps benefits able to pay increasing health care costs. At one time, UnumProvident developed a LTC package because it was thought it would help the company improve its profitability. In the end, Unum was nearly charged criminally in California for abuses involving calculations of benefits using inflation factors.
Therefore, it’s very important for potential elderly insureds to understand the LTC contract and how it actually works.I have been managing LTC patients/insureds for over 20 years. If you have any questions about assistance, please give me a call. By the way, I also provide assistance with Health and Life Insurance as well.
