Skilled care is acute nursing and rehabilitative care given by a RN or therapist, usually daily (i.e. around the clock) and supervised by a physician.

Intermediate care involves occasional (not around the clock) nursing and rehabilitative care under the supervision of skilled medical personnel.

Custodial care involves assistance in performing the activities of daily living. This level of care can be given by non-medical personnel, whether in a nursing home, adult day care center, or in an individual's home.

Home care includes part-time skilled care, therapy, home health aides, etc. at the individual's home.

 

SCOPE OF COVERAGE

Institutional Care and Home Care. Coverage can be for one or more of the four levels of care described above. Specifically, it is important to know where the services can be received for a particular level of care -- in a nursing facility, at home, or a combination of both. Because most individuals will want to stay at home for as long as possible, home care coverage is an important feature to include in a policy, usually as a rider.

Does the policy state that custodial or home care has to be provided by a licensed or certified professional, or can it be done by a non-professional, e.g., a family member?

COMMENCEMENT OF COVERAGE.

The policy should clearly define when coverage will begin. These starting points, commonly referred to as "benefit triggers," have progressed from the strict standard of "medical necessity" to a finding that the insured is unable to perform a minimum of two of the "Activities of Daily Living" (referred to as "ADL's").

Coverage can be "first day" protection, or there can be a waiting (elimination) period (generally 20 to 365 days) before coverage begins.

 

LENGTH OF COVERAGE.

Policies can have a set benefit period, typically two to four years, for any one stay in a nursing facility, or they can remain in effect for the insured's lifetime.

 

AMOUNT OF BENEFIT. The amount of the benefit payable to the insured will be a function of three components:

1. Set dollar amount specified in the policy (for example, $100 per day).

The home health care benefit can be less than (typically 50%) or equal to the nursing home benefit.

 

2. Inflation factor, simple or compounded.

Inflation protection is an important consideration in order to guard against increases in nursing facility expense.

 

3. Length of coverage -- whether for:

A set number of years (or a set maximum amount) or

Lifetime.

 

Risk of increased premiums. A long-term care policy may be called "guaranteed renewable," but the company will still have the right to increase premiums. With companies that lack sufficient underwriting experience in the long-term care area, there is a risk they will conclude that their policies have been underpriced, thus resulting in substantial increases in premiums.

The danger is that elderly couples will let their long-term care policies lapse if the premiums become too high, thus ending coverage before they need it.