Text Box: In recent years, long-term care (or nursing home) insurance has become widely available as a source for funding long-term care expenses, whether received in an institutional setting or at home. Such policies are extremely flexible, and can be designed to pay for all long-term care costs indefinitely and without regard to Medicaid eligibility, or as a supplement to Medicaid payments. Coupled with Medicaid planning, they can also provide benefits during the limited period of Medicaid ineligibility caused by having excess countable resources, including the situation where assets have been transferred during the look-back period. HOW TO ANALYZE A LONG-TERM CARE POLICY Here are four important questions to ask when analyzing any long-term care policy. 1. WHAT IS THE SCOPE OF COVERAGE? Coverage can be for one or more of the four levels of care – skilled care, intermediate care, custodial care, and home care. 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 given by a non-professional, e.g., a family member? The policy may permit non-professionals to provide care, but such flexibility will likely come at the cost of increased premiums. WHEN DOES COVERAGE BEGIN? The policy should clearly define when the payment of benefits 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"). ADL’s are usually described as: bathing, dressing, toileting, transferring, continence, and eating. Better policies go further and provide that coverage will start when the insured develops "severe cognitive impairment," which means that the insured can physically perform the ADL's, but has lost short- or long-term memory or orientation as to person, place, and time, and such loss requires substantial supervision by another individual for the purpose of protecting the person or others from threats to health and safety. Coverage can be "first day" protection, or there can be a waiting (elimination) period (generally 20 to 365 days) before payment begins. The elimination period can be determined differently for different levels of care. For example, for nursing home care the elimination period may be 90 days, but for home care the waiting period can be three times that period (270 days, for example). Days of care may also have to be consecutive, or can accumulate over a period of time. Text Box: Page # Text Box: What to look for in a long-term care insurance policy Text Box: Fall, 2003

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Last Updated: 06/29/07