Text Box: To commence receiving benefits, a claim form is filed evidencing the date, cause, and extent of the disability, plus: Certification by a physician that the insured is unable to perform two or more ADL’s for a certain number of days, or requires supervision by another person due to cognitive impairment. Plan of care developed by a licensed health care practitioner. 3. HOW LONG DOES COVERAGE LAST? 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. Sometimes the coverage is capped in terms of a maximum benefit amount, e.g., $144,000. (Bear in mind that statistically the average nursing home stay is 2 ˝ to 3 years.) 4. WHAT IS THE BENEFIT AMOUNT? The amount of the benefit payable to the insured will be a function of three components: 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.) Inflation factor, simple or compounded. Simple inflation means that the benefit amounts will increase each year by 5% of the original benefit amount. Compounded inflation means that the benefit amounts will increase each year by 5% of the previous year's benefit amount. Inflation protection is an important consideration in order to guard against increases in nursing facility expense. Because adding the inflation feature will increase the premium, this may not be worth it for an older insured, but is essential for a younger insured. Length of coverage, whether for a set number of years (or a set maximum amount) or for lifetime. FINAL CAUTION Beware of the 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 the policy-holder will let his or her long-term care policy lapse if the premiums become too high, thus ending coverage before he or she needs it. The safest course is to use a broker who specializes in long-term care policies. Text Box: Page #

What to look for in a long-term care
insurance policy (continued)

DISCLAIMER

Martin J. Hagan is licensed to practice law in the Commonwealth of Pennsylvania. This website is intended solely for informational use and is not intended to solicit clients. Likewise, any information contained in or obtained from this web site is for informational purposes only and is not intended to be used as legal advice.

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Last Updated: 06/29/07