Two well-established truths provide the foundation for long-term care insurance (LTCI). First, health concerns naturally increase and develop with age. Second, insurance provides various financial protection for that which a policyholder values.
Moreover, approximately two out of three adults over 65 will likely require long-term care service in later years. A basic understanding of LCTI serves not only to educate options for care, but also to document denial of benefits.
Who provides LCTI and what benefits are available?
Generally, LTCI provides coverage for an individual’s needs for assistance with activities of daily living (ADL) due to a chronic medical condition, disability or disorder.
Eligibility requirements for benefits often say an older adult must need assistance with two ADL areas: bathing, eating, dressing, getting to the bathroom or getting out of bed. Health care providers must assess that the need will last a minimum of 60 days.
Most policies cap the daily and lifetime benefit pay out amounts. In addition, policyholders elect the amount of coverage they want and differ primarily in from whom the individual purchases the insurance.
An elimination period – lasting between 30 and 90 days – requires the policyholder to pay for LCTI services before receiving reimbursement.
Differences in the two types of coverage include:
- Standalone policy: Offered through a preferred insurance provider, this insurance pays another entity, e.g. health care agency or skilled nursing facility, on policyholders’ behalf.
- Part of life insurance policy: The greatest difference lies in the payout of benefits. A typical policy pays two percent of the death benefit toward the cost of care over a period of years.
How many individuals have an LCTI policy?
Despite an aging population and the rising cost of health care, LCTI remains uncommon. Fewer than eight million U.S. adults have LCTI. At the same time, skilled nursing facilities and assisted living homes charge more than $90,000 and $54,000 for a shared room, respectively. In Oklahoma, the annual cost of a room in a nursing home ranges between $65,700 and $73,000.
Changes in healthcare quality and related cost contribute only part of whether LCTI works for an individual. Regardless of the decision, individual insurance policies have specific terms that may reduce or deny benefits. Attorneys familiar with how policies and the law interact can offer guidance.