Aging Well

Aging Well

The ABC's of longterm care

Posted January 11, 2018 6:00 a.m. EST

Longterm care policies are complicated, often have lots of conditions and can be hard to decipher

I recently met with a family who have been caring for their 90-year-old mother in their home. They have done so willingly out of love, but as her needs have increased, they fear they will not be able to do so for much longer while also keeping her safe. The issue is, like many people, they have heard just how expensive assisted and nursing care is. For those who do not qualify for special assistance, they are right. In my experience of visiting over sixty facilities in the area, the cost of care ranges from $4,500 up to $10,000/month. The mother does have a long-term care policy, which she purchased years ago and for which she still pays $900 in premium costs per month. The family is unsure what exactly it covers.

When trying to make sense of your parents’ policy or considering purchasing your own, here are important things to look at:

  1. What does it cover? The earliest policies covered primarily nursing home care, but policies then broadened to meet people’s needs. Some started to cover anything from home modifications to in-home help by an approved caregiver up to the costs of daily living in Assisted, Memory and Nursing Care communities. Some established companies, like State Farm, are getting out of the business. Others are offering only very specific coverage (for example, skilled nursing care in an approved facility and only up to a certain daily limit).
  2. What event triggers coverage? Most require a physician complete a specific form provided by the insurance company that measures the client’s ability or inability to perform “Activities of Daily Living (ADL).” Policies are often triggered when a client is no longer able to perform two ADLs or safely care for themselves due to significant cognitive decline. If Assisted Living is needed, some companies, though not all, require you to work with their care coordinator to find an approved facility. Other companies leave that decision to family.
  3. Another detail: In terms of ADLs, some companies will even distinguish between stand-by versus hands-on assistance. For most, stand-by is the same as hands-on assistance.
  4. Is there an “elimination” period? An “elimination,” or waiting, period indicates how many days must pass between the date the physician completes the form that indicates the client meets the triggering event requirement and when the policy begins to pay out. Before the company would begin to pay out, ninety days had to pass while the client was paying for all services out of pocket, starting with the date the physician report was completed. All companies today have an elimination period and your price will be partially based on whether it’s a 30, 60, or 90-day waiting period. You should keep in mind that some count calendar days and some count service days. If you’re getting care seven days/week in skilled nursing, you will reach your 90-day elimination period in three months. If you’re at home and only get help three days/week, it will take a lot longer to use up 90 service days. Additionally, some policies require only one elimination period, whereas others, if you start over with care, require a whole new elimination period.
  5. More and more companies are pulling out. The amount of coverage you can buy is going down. You used to be able to get an unlimited policy. No one sells more than five years now.
  6. Look for an A+ rated company to buy from, but keep in mind that even that is not a guarantee in this business.
  7. Most policies have the potential for rate increases. If there’s not a guaranteed price, there will often be substantial rate increases. You don’t want to pay for ten years and then, at age 70, not be able to afford it.
  8. What is the maximum daily benefit? Some earlier policies had unlimited coverage. Current policies have daily maximum benefits of $100 up to $300.
  9. What is the maximum policy benefit? No one sells unlimited coverage anymore. If you’re lucky, your parent has one of those policies. In my client’s case, their mother had a maximum payout of $300,000 for care in a skilled nursing facility.
  10. Most companies sell a per day limit, but there are a few companies that sell a per month limit. The per month policy is better if your costs fluctuate by day.
  11. Some policies even cover respite care. If a caregiver who cares for their loved one at home and needs a break, they can find an approved facility with availability which provide up to four weeks of respite care.
  12. Some companies have a rider where if one spouse dies and never used the benefit, then the benefits can be carried over to the other spouse.

Very Important Considerations

  1. Before looking at places for mom, take a close look at her longterm care policy. If she has been paying into one for years, you want to make sure you choose a place which meets the policy’s criteria.
  2. If you suspect mom might meet the criteria, ask the company what specific form the doctor needs to fill out for the policy to kick in. Most companies have their own report and will not accept a generic form.
  3. If there is an elimination period, in addition to the doctor’s confirmation that the client has met the triggering events and conditions, the family must show that they have been paying out of pocket for the needed services (which are provided by an approved provider) for that elimination period. In other words, if mom has been placed in a skilled nursing facility which meets the LTC policy’s requirements, then the family must show they have paid for the specified elimination period out-of-pocket for the specified number of days.
  4. The care-provider must meet the licensing requirement of the insurance company for the days to count towards an elimination period.
  5. Sometimes mom or dad, in an effort to avoid being moved out of the home to a community, will “perform well” for the doctor and the doctor won’t ascribe to the need. In this case, if your parent has a longer-term relationship with the physician, you might call or send an email before the visit explaining what you hope to do and providing the signs you have seen that support the parent’s daily health status. A good doctor with a relationship with your parent might be able to frame the necessity of a move in a way your parent can better take in.
  6. Before an insurance company will share your parent’s policy or answer questions about it with their client’s adult children, most will require the parent mail or fax a Power of Attorney for health care to the company. If this is not in place, this becomes the first priority.
  7. Some plans are “tax-qualified,” which means that you might be able to deduct the premium costs from your taxes. More importantly, you will not pay taxes on reimbursement checks for benefits received.
  8. Typically, if costs are covered, the family must be prepared to pay all costs up front and then submit claim forms and receipts for reimbursement to the insurance company by fax or mail. It is recommended they follow-up with a phone call. It is best if one person in the family can be the point person for contact with the company so that nothing falls through the cracks.
  9. Typically, when claims are being paid out, the client no longer pays premiums.

Activities of Daily Living include:

  • Bathing. The ability to clean oneself and perform grooming activities like shaving and brushing teeth.
  • Dressing. The ability to get dressed by oneself without struggling with buttons and zippers.
  • Eating. The ability to feed oneself.
  • Transferring. Being able to either walk or move oneself from a bed to a wheelchair and back again.
  • Toileting. The ability to get on and off the toilet.
  • Continence. The ability to control one's bladder and bowel functions.