Long-Term Care Insurance: How to Use a Policy and File a Claim
Long-Term Care Insurance has become a popular type of insurance that provides coverage for people who need help with everyday living activities or supervision due to dementia. The benefits are often used to pay for at-home assistance, adult day care centers, assisted living, memory care, and nursing homes.
These policies are helping people nationwide. In 2021 alone, over 12.3 Billion in benefits have been paid to policyholders, much of those benefits helping them stay in their homes.
LTC Insurance policies have been around since the 1970s and have become increasingly popular among Americans over 50. In fact, the American Association for Long-Term Care Insurance reports that 88.2% of people purchasing Long-Term Care Insurance were aged 45 to 65. While some surveys report that 80% of respondents say they should get coverage before age 70, 44% of applicants ages 70 to 74 get declined for coverage. For ages 65 to 69, 32.5% see their applications rejected.
What is Long-Term Care Insurance?
Long-term care insurance covers the cost of long-term health care, which can include anything from in-home caregivers to a nursing home and everything in between. The goal of long-term health care is to help you maintain your independence and quality of life as you age and need assistance with daily activities such as eating, dressing, or bathing or supervision due to dementia.
Long-Term Care Insurance provides a benefit account from which you receive a monthly or daily benefit to pay for care. Premiums are based on the initial amount of money within the policy. Long-Term Care Insurance policies vary significantly in price and coverage, so it's essential to understand what each policy offers before deciding on one that's right for you.
Why Buy Long-Term Care Insurance?
Long-term health care is expensive. In fact, the average base cost of a stay in an assisted living facility is around $49,000 per year - LTC NEWS Cost of Care Calculator. Depending on the amount of in-home care you need, it can be even more expensive. Although the least used type of care, nursing homes are the costliest. These costs vary depending on where you live.
But with Long-Term Care Insurance, you can pay for these services without taking out a loan or draining your savings account. You can also avoid going into debt and having to sell your home to pay for long-term health care costs. For most people, they want to avoid Medicaid. Medicaid will pay for long-term care services, but you must have little or no income and assets. Health insurance and Medicare pay a limited number of days of skilled services.
The other thing to consider is the consequences placed on your family. Often, without an advance plan, adult children must become caregivers. Trying to juggle a career, family, and caregiving is challenging, if not impossible. Many people don't want to place this burden on their loved ones.
Most people obtain coverage in their 50s. Several top-rated insurance companies offer coverage. Premiums can be affordable but vary dramatically between insurance companies. Generally, a Long-Term Care Insurance specialist will help you navigate the available options and provide you with accurate quotes from all the top companies.
How to File a Claim for Long-Term Care Insurance Benefits
If you're eligible for Long-Term Care Insurance benefits, the process of filing a claim is pretty straightforward.
First, make sure that you actually qualify for coverage. Your policy may have specific terms and conditions that could exclude certain types of care. Read up on these details, so you know what's covered before filing a claim.
Federal regulations have standardized the benefit triggers if your policy is a tax-qualified Long-Term Care Insurance policy - Is Making a Claim for Long-Term Care Insurance Benefits Difficult?
Next, get a copy of your policy if it's necessary to reference it during any communication with the insurer or while waiting for them to review your claim. The policy will include a "schedule of benefits" outlining the initial benefits and any "riders" attached, like inflation protection or shared spousal benefits. You will also find the elimination period, which is a deductible based on days, not dollars.
Sometimes health insurance or Medicare may pay some of the first 100 days if skilled care is required. Any days paid for by health insurance, or Medicare will go against your elimination period.
You Have Control
You can use any providers or facilities you want, as long as they are operating legally (meaning licensed properly). Some LTC Insurance policies pay you a cash benefit. With those plans, the insurance company will pay you the full cash amount, no matter the bill. Since the payment is going directly to you, you have the freedom to use anyone you want to care for you.
Otherwise, the insurance company will pay bills they receive from providers based on the benefits within your policy. In this case, you are assigning the benefits directly to the provider.
If the actual cost of your care is more than your Long-Term Care Insurance benefit, you will pay the difference. Keep in mind that you will have income from social security or retirement accounts that you can supplement any difference in the cost and your LTC Insurance benefit. This is much better than paying 100% of the cost and adversely impacting your lifestyle and legacy.
You can find the phone numbers for all the major insurance companies and get help with processing a claim here - Filing a Long-Term Care Insurance Claim.
As you can see, Long-Term Care Insurance is a good way to plan for the future. It can help you cover costs that Medicare doesn't and give you peace of mind while keeping your wealth intact. However, it's not right for everyone—and even if it is right for you, it may not be the only tool in your retirement planning arsenal.