This is the third installment of a three-part blog post providing responses to common queries about long-term care insurance and issues related to successful claims. When a family member needs long-term care, the cost of paying out of pocket for in-home supportive services or a nursing home is far beyond the means of most people based on savings and net assets. Long-term care insurance (LTCI) can effectively provide different levels of care in various settings, including the insured’s home, an assisted living facility, or a skilled nursing home.
Can I defer a decision on LTCI since I am young and healthy?
Many people procrastinate in making this type of financial investment, but premiums are determined based on a number of factors relevant to the magnitude of risk. The amount of premium is directly related to the applicant’s age. Insurance premiums can increase when a rate increase for an entire class of applicants is approved by the state insurance commissioner. This form of insurance is more prone to rate increases because it is a newer form of insurance, which means that insurers have less underwriting history in determining the risk level.
Exclusions that require careful consideration when included in a prospective LTCI policy?
Although there are many types of long-term care policies, they are not all created equal. Many are more likely to result in claims disputes and denials. Applicants should beware of LTC policies with provision like those indicated below:
- Limits on Location: The best policies permit an individual to obtain treatment and care at their home or at a wide range of facilities, including assisted living and nursing home facilities. Some policies limit the type of facility where care can be provided or exclude in-home care.
- Pre-Existing Conditions: While this limit has disappeared for health insurance, the Affordable Care Act does not apply to LTC policies. Certain LTCs include exclusions for certain conditions affecting a patient at the time an application for coverage is completed.
- Gatekeeper Requirements: A significant number of policies deny a policyholder of the right to obtain benefits based on the recommendation of his or her treating physicians. Under these policies, the insured must submit to an evaluation by the insurer’s doctors. As one might imagine, these doctors tend to make it much harder to be approved for benefits.
- Excessive Number of ADLs Required: One of the most common triggers for the receipt of LTC benefits are activities of daily life (ADLs) that an insured cannot complete. Policies that only require the identification of two ADLs are preferable to those that withhold benefits without a higher number of activities that the insured is unable to perform.
- Non-Tax Qualified: ADL policies that are tax-qualified provide dual advantages. First, the policies provide a tax minimization tool. Second, the law imposes certain minimum standards for a policy to qualify as tax-qualified.
- Mental and Emotional Disorder Exclusions: Some policies provide benefits only in very limited cases based on an emotional or mental condition. For example, some policies limit benefits to cases of Alzheimer’s disease in the absence of an organic disease that causes the psychological condition.
What factors are relevant in determining whether I should purchase LTC insurance?
Although this is an individual decision, anyone can benefit from LTC coverage in the event of an unanticipated injury or illness. However, the urgency of such a purchase increases based on a person’s assets, medical history, age, and income. Some of the factors that justify considering this investment include:
- Family members to whom you wish to leave your property
- Age range between 40 and 84 (LTC coverage is usually not available past the age of 84)
- Any family history of Alzheimer’s disease
- Sufficient income to afford premium payments now and in the future
- Substantial assets that you would like to financially protect
What are the common reasons insurance companies use to deny long-term care benefits?
While the specific justifications that an insurer will use to deny LTC benefits depends on the specific policy terms, state law, and the relevant circumstances, some common justifications used for denial include:
- No Coverage for Personal Care: The insurer might deny a claim for “personal care,” which essentially include things like light housework or running errands. However, policyholders can frequently get these types of services covered provided the policyholders meets the ADL requirements. Sometimes policyholders also have their claim denied because a family member is the caregiver. However, these provisions can often be overcome because the family members excluded by the policy might not be one of the excluded family relationships.
- Lack of Prior Hospitalization: This “gatekeeper provision” will most typically be found in older policies. Many states now prohibit conditioning benefits on a stay in a hospital or nursing home.
- Denial Based on Non-Payment of Premium: A common scenario involves a denial for non-payment after the insured has suffered a cognitive impairment. However, the majority of states provide a grace period of up to five month before a policy lapses for non-payment of premiums. A statement from a doctor that the insured was “cognitively impaired” generally is sufficient to get the policy reinstated.
- Care Provider Not Qualified: If an insured will be receiving care in a nursing home or assisted living facility, the operator of the entity must be an “eligible care provider.” The terms of the policy might require that the facility use personnel and furnish care that meets certain specifications or a specific type of license. This means that selection of a facility requires determining that it is covered under the policy. The hassle of moving a loved one into a facility only to move the person out again because of a lack of coverage is something to be avoided.
Our Miami long-term care insurance law firm invites you to contact us if you are having difficulties with your insurance company. Insurance claims lawyer J.P. Gonzalez-Sirgo handles claims against insurance companies in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.