Understanding long-term care insurance

11/17/17

By Brad Breeding

If you or a loved one own long-term care insurance (LTCI) it is important to understand how the policy works and what it covers so you will be better equipped to incorporate it into your overall retirement plan. Here is a description of the key components of LTCI:

Type(s) of Care Covered

If you own long-term care insurance (LTCI) or are thinking about purchasing coverage it is important to understand how the policy works and what it covers. Adult children should also be familiar with the details of their parents’ coverage because they will likely be involved with coordinating LTCI benefits when the time comes. By understanding the details of the policy you will be better equipped to get the most out of your coverage when it is needed.

What type of care is covered?

The earliest forms of LTCI (issued more than two decades ago) were considered “nursing home” policies, which covered skilled nursing services received in a nursing facility. Long-term care delivered at home or in an assisted living facility were not covered expenses.

Eventually policies began covering care in assisted living facilities and sometimes at-home care, but often at a discounted amount. For example, the policy might cover care in an assisted living facility at 50 percent of the benefit amount that would be paid for care received in a skilled nursing facility.

Most policies issued within the last five to 10 years are more comprehensive, providing the same amount of coverage regardless of where care is received. These policies may also cover expenses like adult day care and respite care.

LTCI Benefit Amount

The benefit amount is usually a daily or monthly amount, and the total lifetime benefit amount is expressed in years. For example, a policy might provide a daily benefit of $200 for three years. This amounts to a total lifetime benefit of $219,000 ($200 x 365 x 3). This does not mean that the policy must be used within three years, but rather that the policyholder has the equivalent of three years of coverage over their lifetime. However, a policy will not pay more than the stated benefit amount in any given day or month. Therefore, using the example above, the policy would not, for instance, pay out $300 for any one day of coverage.

Inflation Rider

Many policies include an “inflation rider” which increases the benefit amount annually to help ensure that the coverage amount reflects the increased cost of care over time. The formula used to determine the increase can vary from one policy to another. If your policy includes an inflation rider, you should know the current coverage amount, as opposed to the originally stated coverage amount. If this information is not clear, contact the insurance company and ask about the current benefit.

Coverage Elimination Period

Most LTCI policies have an elimination period. This is similar to a deductible, but is measured in days, not dollars. A policyholder chooses the elimination period (from zero to 180+ days) at the time of application. A longer elimination period lowers the premium, and vice versa. A policy’s elimination period can be based on days of care or calendar days. For example, a policy with a 90-day elimination period would specify if that means 90 calendar days (beginning with the first day of care), or 90 days of care. In some cases there could be a substantial difference in time between the two if there is a break in care within the 90-day period. Additionally, a policy could have different elimination periods for different care settings.

If you are thinking about buying coverage and want to keep your premiums lower, or if you want to lower premiums on your existing coverage, consider extending the elimination period. You may decide that you are willing, and able, to pay out of pocket for a certain amount of time but want to cap your exposure for all care beyond that.

Benefit Triggers

Before LTCI coverage will pay benefits, the policyholder must be unable to perform at least two of the six activities of daily living (ADLs): feeding, toileting, dressing, bathing, walking/transferring (i.e., moving from bed to wheelchair), and continence. Some policies may require that the policyholder be unable to perform three ADLs instead of two. Policies may also specify what is required before the policyholder is declared “unable” to perform a certain ADL. Additionally, some policies may include cognitive impairments, such as dementia or Alzheimer’s, as a benefit trigger. In some cases, a policy will not pay benefits unless a doctor certifies that the care is medically necessary.

Benefit Payment Methods

LTCI policies are generally categorized as either expense-incurred (reimbursement) or indemnity (set dollar amount). Under an expense-incurred policy, a policyholder only receives benefits when care is received. The policyholder, or a representative for the policyholder, must submit receipts for services. If it is an approved service, the insurance company will pay the insured or the care provider for the cost of services up to the daily (or monthly) benefit amount.

The less common indemnity plan pays the daily or monthly benefit amount stated in the policy, regardless of the actual cost of services. Once the claim is approved the benefit is paid directly to the policyholder, up to the stated benefit amount, and continues as long as eligible services are being received. The premium for an indemnity policy is typically higher than it would be for comparable coverage under an expense-incurred policy.

Hybrid Policies

An increasingly popular type of long-term care plan is actually a hybrid that combines life insurance (or a deferred annuity) and long-term care insurance. If you meet the benefit triggers, which are typically similar to those described above, then you can tap into the long-term care benefit. If, however, you never require long-term care insurance then your heirs will receive the death benefit. Additionally, if you cancel the policy anytime in between you will receive the cash surrender value at that time.

The appeal of a hybrid policy is that the policyholder (or the heirs) is assured to receive cash back whether he or she uses the long-term care insurance or not. The trade-offs are that a traditional policy will buy more coverage per dollar and a hybrid policy requires premiums to be paid in a lump sum — usually $50,000 or more, or at least within 10 years. When premiums are spread out over 10 years the amount per year will be higher than for a traditional plan since traditional plans spread payments over lifetime.

Those who own a cash value life insurance and are interested in getting long-term care insurance may be able change their existing policy into a hybrid plan without having to pay any additional premiums. This can be particularly beneficial for those who, due to health issues, may not be able to qualify for traditional long-term care insurance because hybrid plans sometimes have more flexible underwriting guidelines. This is particularly true of annuity-based hybrid plans.

For a more detailed explanation of LTCI, request a Long-Term Care Insurance Buyers Guide from your state’s insurance department. To understand how long-term insurance can be applied to living at The Culpeper, contact Helen Burnett, Director of Marketing, at hburnett@theglebe.org or call 540-591-2100.

Brad Breeding is co-founder and president of myLifeSite, a website designed to provide objective information about continuing care retirement communities. A certified financial planner, Brad’s extensive knowledge of the senior living industry, combined with his financial planning background, allows him to provide valuable insights about lifestyle, healthcare, and financial planning considerations for seniors. This article is legally licensed for use.  

 

 


The Glebe celebrates National Senior Health & Fitness Day®

06/13/17

DALEVILLE, Virginia —The Glebe, a LifeSpire of Virginia continuing care retirement community in Daleville, joined an estimated 1,000 local groups to celebrate the 24th Annual National Senior Health & Fitness Day (NSHFD) May 31. More than 80 attendees at The Glebe joined with an estimated 100,000 seniors across the country to promote active, healthy lifestyles through physical fitness, good nutrition and preventive care.

“The festival is a great opportunity for seniors to renew their commitment to health and fitness, and The Glebe is proud to be a host site,” said Rachel Carson, The Glebe’s fitness manager.

The goals of National Senior Health and Fitness Day are to make exercise fun, increase awareness of the benefits of a regular exercise program for older adults and encourage all older adults to take advantage of the many health and fitness programs offered at The Glebe, Carson said.  Activities included nine healthy living presentations and 10 field day stations during lunch time, including corn hole, a “rethink your drink” station and a “learn a yoga pose” station.

“We hope today’s events inspired residents and future residents to be more physically active and to pursue healthy lifestyles centered around wellness,” Carson said.

About National Senior Health & Fitness Day®

National Senior Health & Fitness Day is always held the last Wednesday in May in support of Older Americans Month and National Physical Fitness and Sports Month. The program, the largest of its kind, is organized by the Mature Market Resource Center, a national clearinghouse for professionals who work with older adults. For more information about National Senior Health & Fitness Day, visit fitnessday.com.

 

Ann Lovell is Corporate Director of Communications for LifeSpire of Virginia, formerly Virginia Baptist Homes. For more information, email alovell@lifespireliving.org or call (804) 521-9192.

LifeSpire of Virginia operates four continuing care retirement communities in Virginia: The Chesapeake in Newport News, The Culpeper in Culpeper, The Glebe in Daleville and Lakewood in Richmond.

 


The Glebe to host June 27 performance of ‘The Jungle Book’

DALEVILLE, Virginia—The Glebe, a LifeSpire of Virginia continuing care retirement community in Daleville, is pleased to host Mill Mountain Theatre’s production of “The Jungle Book” June 27 at 11 a.m. The short play, based on the classic stories by Rudyard Kipling, is Mill Mountain Theatre’s summer outreach production, which features the 2017 summer apprentice company. The Glebe is the only location in Botetourt County to host the production, which will be shown at other locations in the Roanoke area June 3 – July 1.

Published in 1894, “The Jungle Book” is a collection of fables set in the Indian jungle. Widely considered a classic of children’s literature, the stories have been adapted numerous times for film and stage. As part of Mill Mountain Theatre’s continuing initiative to connect theatre and literacy, children attending the play will also receive complimentary books.

Admission is free, but space is limited.  Call 540-591-2202 to reserve your spot.

 

Ann Lovell is Corporate Director of Communications for LifeSpire of Virginia, formerly Virginia Baptist Homes. For more information, email alovell@lifespireliving.org or call (804) 521-9192.

LifeSpire of Virginia operates four continuing care retirement communities in Virginia: The Chesapeake in Newport News, The Culpeper in Culpeper, The Glebe in Daleville and Lakewood in Richmond.

 


Compare us with other CCRCs

Choosing a continuing care retirement community is one of the most important decisions you will ever make, and knowing and comparing your options is an important part of the selection process. “Where you live matters,” a website sponsored by the American Seniors Housing Association, has developed a CCRC visit checklist to help you identify the amenities and services that will best fit your lifestyle in your retirement years. We encourage you to download and print this resource and bring it with you when you visit The Glebe and other CCRCs. We think you’ll find we have everything you need to make your next move your best move!

Schedule an appointment with one of our retirement counselors for a visit today!