What a Long Term Care Policy Covers-- and What it Doesn't
Standard Long Term Care Insurance Policy Benefits
With some variation, the following benefits are found almost universally in all traditional long term care insurance policies
- All levels of care in a Nursing Facility
- All levels of care in Assisted Living or Residential Care
- All levels of care at Home
- Adult Day Care
- Bed Reservation
- Hospice Care (at home or in a facility)
- Care Coordination
- Caregiver Training
- Respite Care
- Home Modification Benefit
- Alternative Plan of Care
- Waiver of Premium / No Lapse Guarantee
Common Riders or Options
- Cash or Cash Alternative
- Monthly Benefits
- Shared Care
- Double Coverage for Accident
- Return of Premium
- Limited Payment Period
- Restoration of Benefits
- Elimination Period
- Inflation Protection
Benefits are Payable as a Result of:
- The inability to perform any 2 of 6 Activities of Daily Living for a period of at least 90 days, or
- A severe Cognitive Impairment requiring either Stand-by or Hands-On assistance
- In either case, subject to a Plan of Care certified by an independent Licensed Healthcare Practitioner no less often than every 12 months
These benefit triggers were standardized by Congress in 1996 and common to all qualified LTC insurance policies sold.
Standard Exclusions & Limitations
Benefits may be limited, or not available at all, even if you would otherwise qualify. Examples of limitations include not paying benefits during the elimination period (eg deductible), or not exceeding the maximum policy limit even when multiple charges are being reimbursed.
There are a handful of recurring exclusions we find in long term care policies. It is up to the individual companies whether they adopt many or just a few. What follows are the most common.
Benefits for which You otherwise qualify will not be limited or excluded by type of illness, treatment, medical condition or accident except, as provided below:
- For which no charge is normally made in the absence of insurance.
- Provided outside the United States, unless specifically provided for by a benefit.
- Provided by your immediate family, unless a benefit specifically states that a member of your immediate family can provide covered care.
- Provided by or in a Veteran’s Administration or federal government facility, unless a valid charge is made to you or your estate.
- Resulting from illness, treatment or medical condition arising out of any of the following:
- Attempted suicide or an intentionally self-inflicted injury.
- Resulting from alcoholism or drug addiction (except for an addiction to a prescription medication when administered in accordance with the advice of a Physician).
- War or any act of war, whether declared or not.
Finally, qualified policies also include a provision called "Coordination with Medicare" or "Non-Duplication of Benefits". The minor part of this provision states that private insurance will be the secondary payer behind any state, federal or other government health program except Medicaid.
The major part of this limitation means benefits will only be paid for covered expenses in excess of the amount paid (or payable) by Medicare, including any amounts that would be reimbursable but for the application of a deductible or co-insurance. This unfortunately-worded legalese means that if Medicare pays (which is rare), then the policy cannot pay any part of your co-insurance bill on days 21 - 100. HIPAA assumes your Medicare Supplement or MedAdvantage is covering these charges. None of this is an issue when Medicare doesn't pay, which is the majority of the time.
That said, Non-Duplication provisions do not disqualify days on which covered services are received from being used to satisfy any elimination period requirement, irrespective of whether Medicare pays or does not.
Please note this list not all-inclusive. Read your policy carefully.