With the average age of Americans constantly rising, numerous people, including many here in Oklahoma, are concerned with how they will pay for long-term care should they need it. There is a question regarding whether traditional insurance policies have a good track record when it comes to covering the costs Medicare won't.
The latest data estimates that only around 7.2 million Americans have long-term care insurance policies. These people hedge their bets that the premiums will be worth it when it comes time to file a claim, but with rising costs of end-of-life care, the coverage may not be there.
The current state of the industry
The pool of companies that provides traditional long-term care insurance has dwindled dramatically. Only about 15 insurers across the country offer the policies these days. If you want to purchase this insurance, you can expect premiums to cost you anywhere from $2,100 to $3,700 a year. Unfortunately, if you don't need long-term care, you lose the money you put into the policy.
The other option is a hybrid whole life insurance policy that allows you to use the benefits for long-term care if you need it. However, if you decide to go with a hybrid policy, your premiums jump up between $8,100 and $13,800 per year. If you are like most people, the cost may not be worth it. You should know that funds left in the policy go to your beneficiaries if you end up not needing long-term care with the added benefit of locking in the cost of your premiums.
The possibility of a denial of your claim
The other potential issue with long-term care insurance is a denial of your claim. Due to the increasing number of people filing claims, insurers may work even harder to keep from paying out on your policy. After all, insurance companies are in the business of making money, and paying out claims cuts into profits. Your insurer may say that you do not qualify for benefits based on your situation. Common reasons for a denial include the following:
- The insurer says that the facility in which you live does not qualify as a "nursing home" in accordance with its definition.
- The insurer claims that you do not meet the requirements of impairment or do not appear to need daily assistance according to nursing assessments.
- The insurer interprets your policy in an unreasonable manner.
- The insurer asks you to provide unreasonable documentation before agreeing to pay the claim.
These are not the only reasons you could receive a denial -- just the most popular. After diligently paying your premiums, you now face paying out-of-pocket for your care as you appeal the denial.
Going up against an insurance company alone may not yield the results you need. Whether you are considering purchasing a long-term care policy or received a denial of coverage on a policy you purchased, it would be in your best interests to understand the fine print of your policy, your rights and your legal options if the insurer fails to fulfill its part of the bargain.