MR. WATSON: The kinds of services associated with long-term care are provided at three levels:
- institutional care - nursing home
- home & community based services (help with cooking (unskilled help), or nursing, rehabilitation, physical therapy, ordered by a DR.(skilled) in the home
- Adult day care those who require assistance with various activities of daily living while their primary care givers are absent.
- Respite care designed to give the caretaker a break. Respite means rest. ***Know this.***
- Continuing Care - provides benefits for seniors who live in a continuing care retirement community, either independent or congregate living.
Long-Term Care Policy Provisions
MR. WATSON: As a result of the Health Insurance Portability & Accountability Act (HIPAA), all policies must contain certain provisions in order for the policy to qualify for tax exempt status.
Qualifying for benefits
MR. WATSON: In the past, long term care policies required at least three days of prior hospitalization or skilled nursing home stays before the policy would pay any benefits. HIPAA changed that. Now, no prior hospitalization is required. Instead these policies use a "benefit trigger". A benefit trigger is an event or condition that must occur before the policy benefits are payable. Diagnosis of chronic illness can be made on two levels: physical and /or cognitive (reasoning, thinking, remembering).
MR. WATSON: The physical diagnosis of a chronically ill individual is one who has been certified as being unable to perform at least two activities of daily living (eating, toileting, transferring, bathing, dressing, and continence).
MR. WATSON: A long term care policy must take into account at least five of these ADLs (activities of daily living). An individual would also be considered chronically ill if he requires substantial supervision to protect his health or safety due to severe cognitive impairment (reasoning, thinking, remembering).
Benefit Limits -
MR. WATSON: two - six years. Some have lifetime benefits.
Age Limits
MR. WATSON: Age limits: usually the maximum age is 79 or even to age 89 and some are being sold at the young age of 50.
Renewability ***
MR. WATSON: Renewability: All LTC policies are guaranteed renewable which means the insurance company *can only increase the premium by class.
Elimination Periods ***
MR. WATSON: Elimination Periods: They range from 0-365 days. No coverage during this period and remember it begins at the time of the diagnosis. This is like a "Time Deductible". The longer the period, the cheaper the premium. But, most states have a maximum of 180 days.
Exclusions ***
- drug and alcohol dependency,
- acts of war,
- self-inflicted injuries &
- non-organic mental conditions ***
MR. WATSON: Alzheimer's, senile dementia and Parkinson's are almost always covered. ****
Taxation ***
MR. WATSON: Taxation of Benefits: benefits are not taxable as long as the policy is considered qualified. (see above chart).
MR. WATSON: In summary, if your mom or grand mom can't do two of five things (Activities of Daily Living) - if she can't control herself, if she's incontinent, if she can't transfer, get out of bed, if she can't toilet, can't eat, if she can't do two of these five things, then she's eligible for a nursing home, and this long-term care policy will kick in, and it starts paying $100 a day, $200 a day, whatever you buy.
MR. WATSON: Here's the deal. Let's say you bought a $200-a-day benefit, but the nursing home only charges $125 a day. The policy would still pay $200 per day. You could use the excess money for toiletries, extras, maybe lipstick that the women like to wear.
MR. WATSON: But most of us, we can't afford to pay $5000 or $6,000 dollars a month. But we can afford long-term care insurance. A Long-term care policy might cost you $1,500, $1,600 a year right now, to give your mom, wife, dad, or husband some dignity later on in life. Does that make sense?
MR. WATSON: Where's the market place? Grown kids. A guy might have three siblings. One will pay for it and have the other siblings reimburse him per month or whatever. So you are splitting a $2,000 annual premium between four people. That's $500. It's the least we can do. Just a thought.
Group LTC
MR. WATSON: Employer offered which means no individual underwriting and the employee can add members of his family. Usually more expensive than individual LTC policies, which is unusual for group insurance.
