Long-Term Care (LTC) Insurance Policies

Secure your future with comprehensive insights into Long-term Care (LTC) Policies. Navigate the complexities of long-term healthcare planning with our guide, exploring the benefits and coverage options these policies offer. Stay informed about the latest trends and regulations shaping the LTC landscape. Discover how LTC policies provide financial security and peace of mind for you and your loved ones. Whether you’re planning for the future or seeking to enhance your existing coverage, our resource empowers you with the knowledge to make informed decisions. Explore the world of Long-term Care Policies for a confident and secure healthcare journey. Dive in now!

Long-Term Care (LTC) Insurance Policies

Although Medicare and Medigap policies provide elderly insureds with protection against the cost of medical care, these programs do not provide coverage for long-term custodial or nursing home care. Medicare will cover nursing home care if it is part of the treatment for a covered injury or illness. Medicare and Medicare supplements pay for skilled nursing care, but the coverage is limited. Medicaid does pay for nursing home care, but it provides coverage only for those that qualify with low income and low assets.

Long-term care policies, which can be marketed in the form of individual policies, group policies, or as riders to life insurance policies, provide coverage for individuals who are no longer able to live an independent lifestyle and require living assistance at home or in a nursing home facility. Long-term care policies can vary in the number of days of confinement covered, the number of home health visits covered, the amount paid for nursing home care, and other contract provisions. They also must provide coverage for at least 12 consecutive months in a setting other than an acute care unit of a hospital.

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Eligibility for Benefits

Normally to be eligible for benefits from a long-term care policy, the insured must be unable to perform some of the activities of daily living (ADLs). Activities of daily living include bathing, dressing, toileting, transferring positions (also called mobility), continence, and eating.

Levels of Care

Generally, long-term care policies will cover 3 levels of care: skilled nursing care, intermediate care, and custodial care. In addition to these levels of care, the long-term care policy may provide coverage for home health care, adult day care, hospice care or respite care, all of which can be received at home.

Skilled Care

Skilled care is daily nursing and rehabilitative care that can only be provided by medical personnel, under the direction of a physician. Skilled care is almost always provided in an institutional setting. Examples of skilled care include changing sterile dressing and physical therapy given in a skilled nursing care facility. Care that can be given by nonprofessional staff is not considered skilled care.

Intermediate Care

Intermediate care is occasional nursing or rehabilitative care provided for stable conditions that require daily medical assistance on a less frequent basis than skilled nursing care. It is ordered by a physician, and skilled medical personnel would deliver or monitor this type of care. Intermediate care could be as simple as giving medication to a group in physical therapy once a day or changing a bandage. It may be carried out in a nursing home, an intermediate-care unit or in the patient’s home.

Custodial Care

Custodial care is care for meeting personal needs such as assistance in eating, dressing, or bathing, which can be provided by nonmedical personnel, such as relatives or home health care workers. Custodial care can be provided in an institutional setting or in the patient’s home. In other words, it involves caring for a person’s activities of daily living, and not hospital or surgical needs.

Skilled care and intermediate care require the assistance of medically licensed personnel. Custodial care may be administered by nonmedical personnel.
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Home Health Care

Home health care is care provided by a skilled nursing or other professional services in one’s home. Home health care includes occasional visits to the person’s home by registered nurses, licensed practical nurses, licensed vocational nurses, or community-based organizations like hospice. Home health care might include physical therapy, occupational therapy, speech therapy, and medical services by a social worker.

Assisted Living

Assisted Living offers help with nonmedical aspects of daily activities in an atmosphere of separate, private living units. In addition to providing meals, transportation for medical appointments, activities, and pleasure trips, assisted living may provide:

  • Linens and personal laundry service;
  • Assistance with dressing and bathing;
  • Reminders regarding medication; and
  • Assistance with eating.

Adult Day Care

Adult day care is care provided for functionally impaired adults on less than a 24-hour basis. It could be provided by a neighborhood recreation center or a community center. Care includes transportation to and from the day care center, and a variety of health, social and related activities. Meals are usually included as a part of the service.

Respite Care

Respite Care is designed to provide relief to the family caregiver, and can include a service such as someone coming to the home while the caregiver takes a nap or goes out for a while. Adult day care centers also provide this type of relief for the caregiver.

Benefit Periods

Long-term care policies usually include an elimination (waiting) period similar to those found in disability income policies. Long-term care elimination periods may range from 0 to 365 days (make sure to check your state-specific requirement in the regulations section). The longer the waiting period, the lower the premium. Insurers usually give insureds an option to select the elimination period that best suits their needs. LTC policies also define the benefit period for how long coverage applies, after the elimination period. The benefit period is usually 2 to 5 years, with a few policies offering lifetime coverage. The longer the benefit period, the higher the premium will be.

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Benefit Amounts

The benefit amount payable under most LTC policies is usually a specific fixed dollar amount per day, regardless of the actual cost of care. For example, if an insured has a fixed daily coverage of $100 and the care facility only charges $90 a day, the insurance company will pay the full amount of $100 a day. Some policies pay the actual charge incurred per day. Most LTC policies are also guaranteed renewable; however, insurers do have the right to increase the premiums.

LTC policies must be guaranteed renewable
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Optional Benefits

For an additional premium, optional benefits are available with long-term care policies.

Guarantee of Insurability

Guarantee of insurability option allows the insured to periodically increase benefit levels without providing evidence of insurability. The amount is usually limited to allowing a 5% compounded annual increase.

Return of Premium

This optional nonforfeiture type benefit is offered by most insurers writing long-term care policies. In the event the insured dies or the policy is lapsed, the insurer will return a certain percentage of the premiums paid.

Qualified LTC Plans

A long-term care insurance policy meets the definition of a qualified long-term care insurance contract if all of the following are present:

  • The only insurance protection provided under the contract is coverage of qualified long-term care services;
  • The contract does not pay or reimburse expenses incurred for services that are reimbursable under Title XVIII of the Social Security Act;
  • The contract is guaranteed renewable;
  • All premium refunds and dividends are used to reduce future premiums or increase future benefits to offset inflation; and
  • The contract satisfies certain consumer protection provisions concerning model regulation and model act provisions, disclosure, and nonforfeitability.

Only products that meet the Qualified LTC definitions are eligible to be marketed as Partnership LTC plans.

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Exclusions

Long-term care policies may have the following exclusions:

  • Pre-existing conditions or diseases;
  • Mental and nervous disorders or disease (except for organic cognitive disorders such as Alzheimer’s disease, senile dementia and Parkinson’s disease);
  • Alcoholism and drug addiction;
  • Treatment or illness caused by war, participation in criminal activities, or attempted suicide; and
  • Treatment payable by the government, Medicare, workers compensation or similar coverage.

Underwriting Considerations

All applications for long-term care insurance policies, except those that cannot be denied based on answers in the application, must contain clear and unambiguous questions designed to ascertain the health condition of the applicant.

Before a long-term care policy will be issued to an applicant age 80 or older, the insurer must obtain the following:

  • A report of a physical examination;
  • An assessment of functional capacity;
  • An attending physician’s statement; and
  • Copies of medical records.

Ohio Regulations and Required Provisions

Standards for Marketing

Every insurance company marketing long-term care insurance coverage must establish marketing procedures to assure that any comparison of policies by its agents or other producers will be fair and accurate. Insurance companies must have marketing guidelines to ensure excessive insurance is not sold or issued.

Advertising

The insurance company must retain all advertisements for at least 3 years from the date that the advertisement was first used.

Appropriateness of Recommended Purchase

When recommending the purchase or replacement of any long-term care policy, an agent must make reasonable efforts to determine the appropriateness of a recommended purchase or replacement.

Every insurer marketing long-term care insurance coverage must establish marketing procedures to ensure that:

  • Any comparison of policies will be fair and accurate;
  • Excessive insurance will not be sold; and
  • Every reasonable effort is made to identify whether a prospective applicant for long-term care insurance already has accident and health or long-term care insurance, and the types and amounts of any such insurance.

Long-term care insurance policies are also subject to the same marketing requirements regarding twisting, high-pressure tactics, and cold lead advertising as Medicare supplement policies.

Inflation Protection

In the state of Ohio, all long-term care policies must offer each policyholder an inflation protection feature that provides, as a minimum, one of the following benefits:

  • Increase of 5% for the annual benefit level;
  • The right of the insured to periodically increase benefit levels without providing evidence of insurability or health status (as long as the option has not been declined for the previous period); and/or
  • Coverage for a specified percentage of actual or reasonable charges.

Replacement

If a long-term care insurance policy or certificate replaces another, the replacing insurance company must waive any time periods applicable to pre-existing conditions, waiting periods and probationary periods in the new long-term care policy or certificate for similar benefits to the extent that similar exclusions have been satisfied under the original policy or certificate.

Unintentional Lapse

An individual long-term care policy cannot be issued until the insurer has received from the applicant either a written designation of at least one person, in addition to the applicant, who is to receive notice of lapse or termination of the policy for nonpayment of premium, or a written waiver dated and signed by the applicant reflecting their decision not to designate additional people. This is also known as the secondary addressee provision.

Outline of Coverage

The outline of coverage must follow the standard format set out in the insurance regulations including information about the insurance company, the policy number and important features of the policy. The outline of coverage must be a separate document, and must be delivered to the insured prior to the application or enrollment form.

Shopper’s Guide

A long-term care insurance Shopper’s Guide must be provided in the format developed by the National Association of Insurance Commissioners (NAIC). The shopper’s guide must be presented to the applicant prior to completing the application (in the case of producer solicitation), or in conjunction with the application (in the case of direct response solicitations).

Pre-existing Conditions

The term pre-existing condition means a condition for which medical advice or treatment was recommended (or received) from a health care services provider within 6 months of the effective date of coverage. The definition of a pre-existing condition, however, does not prohibit an insurer from using an application form designed to elicit the complete health history of an applicant.

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Long-Term Care (LTC) Insurance Policies

Secure your future with comprehensive insights into Long-term Care (LTC) Policies. Navigate the complexities of long-term healthcare planning with our guide, exploring the benefits and coverage options these policies offer. Stay informed about the latest trends and regulations shaping the LTC landscape. Discover how LTC policies provide financial security and peace of mind for you and your loved ones. Whether you’re planning for the future or seeking to enhance your existing coverage, our resource empowers you with the knowledge to make informed decisions. Explore the world of Long-term Care Policies for a confident and secure healthcare journey. Dive in now!

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