Demystifying Long Term Care Insurance
Part 2: What do I need to know about my policy?
Like any insurance, the quality of your coverage depends on the type of policy you purchased. However, there are a few constants that are important to know as you begin the process of opening your policy and setting up care. Here are three items common to every policy that you should familiarize yourself with:
Daily / Weekly / Monthly Reimbursement: your policy will have a maximum payment they reimburse, and typically they measure this by the day, but occasionally they measure by the month. I’ve seent his range from $50 per day to $8,000 per month. Obviously, the higher your reimbursement limit, the more care it will cover on any given day, and the more expensive your premium.
Elimination Period: think of this like you do your deductible for auto or health insurance. Most policies have a timeline that you’ll be responsible to pay out of pocket before they reimburse. This can range anywhere from 0 days (on more expensive policies) to 100+ (these are more common than you’d think). As you work through your budget, it’s important to remember that these will be out of pocket for your family. With care costs often upwards of $100/day, this can mean $10,000 upwards in out of pocket expenses. However, if receiving home health through medicare, your policy should count these towards elimination days, which can lead to savings!
Lifetime Benefit: Like your auto policy has a max coverage, your LTCI will have a max lifetime benefit, too. Occasionally, old policies didn’t have these underwritten, but all policies do now. I’ve seen unlimited lifetime benefits to $100,000, on the low end. Policies are written to index towards you not hitting these number.
Policies have many other perks, if you purchase them. Some have inflation protections, some have different access to reimbursement depending on care type (home care, assisted living, skilled nursing), clauses to bypass elimination periods under circumstances. These will all be policy-specific, and it’s important to understand them from your parents or the representatives at their companies.