Long Term Care Insurance continued

Policy standards

Free look is minimum of 30 days from the date of delivery, during which the policyowner may return the policy for a full premium refund if they are not satisfied for any reason. *****

Individual long-term care must contain renewal provisions of "guaranteed renewable" or "noncancellable." *****

Preexisting conditions look back six months and may exclude for six months. What we mean is that the insurance company may look for conditions for which medical advice or treatment was sought within six months before the effective date of the policy. If the company finds something, they may exclude it from coverage for the first six months.

Limitations and exclusions

A long-term care insurance policy in Florida may exclude the following:

• Preexisting conditions as just described
• Mental or nervous disorders (but not Alzheimer's disease)******
• Alcoholism and drug addiction
• War or act of war (whether declared or undeclared)
• Participation in a felony, riot, or insurrection
• Service in the armed forces
• Suicide (sane or insane), attempted suicide, or intentionally self-inflicted injury
• Aviation (this exclusion applies only to non-fare-paying passengers)
• Treatment provided in a government facility (unless otherwise required by law)
• Services for which benefits are available under Medicare or other governmental program (except Medicaid)
• Any state or federal workers' compensation, employer's liability or occupational disease law, or any motor vehicle no-fault law
• Services provided by a member of the covered person's immediate family
• Services for which no charge is normally made in the absence of insurance.

A long-term care insurance policy may not do the following:

• Be canceled or non-renewed on the grounds of the age or the deterioration of the mental or physical health of the insured.
• Contain a provision establishing a new waiting period if existing coverage is converted to or replaced.
• Restrict its coverage to care only in a licensed nursing home or provide significantly more coverage for such care than coverage for lower levels of care
• Contain an elimination period in excess of 180 days (remember the elimination period is when the insured needs the care and benefits are not being paid)
• Condition eligibility for benefits on a prior hospitalization requirement (but Medicare Part A is allowed to do this). ************

The premium rate must be based on the issue age of the insured. A long-term care policy may not be issued if the premiums will increase based solely on age. Any premium increase for existing insureds must not result in a premium that would exceed that charged for a newly issued policy, except to reflect benefit differences. Any long-term care insurance policy issued or renewed must make available to the insured the contingent benefit upon lapse (which is discussed later in this chapter).

Home care coverage

This section is not listed on the exam content outline, but it is good to be familiar with it because it indirectly pertains to the benefits covered by long term care policies.

A long-term care policy may not use any of the following methods to exclude benefits:

• Requiring that home health care cannot be covered unless the insured would, without the home health care, require skilled care in a skilled nursing facility
• Requiring that the insured receive nursing or therapeutic services in a home setting before home health care services are covered
• Excluding coverage for personal care services provided by a home health aide
• Requiring that the insured have an acute condition before home health care services are covered
• Limiting benefits to services provided by Medicare-certified agencies or providers
• Excluding coverage for adult day care services

Inflation protection ****

A long-term care insurance policy offered in Florida must offer inflation protection. The inflation protection option required by this paragraph must be at least as favorable to the policyholder as one of the following:

• A provision that increases benefits annually at a rate of not less than 5% compounded annually;
• A provision that guarantees that the insured person won't have to provide evidence of insurability to get the benefit increase; and
• A provision that covers a specified percentage of actual or reasonable charges and does not include a specified indemnity amount or limit.