How To Maximize The Benefits of Your Long-Term Care Insurance
Understanding the benefits of your long-term care plan, even at a high level, can help you to be better informed on how and when to use it. Many people purchase long-term care insurance to help cover the cost of care when they can no longer manage the activities of daily living by themselves, such as eating, dressing, bathing or walking.
In fact, I recently began working with a client whose husband had been ill for several years. He had received in-home care before moving into an assisted living community. My client had been so preoccupied with her husband's care that she never thought to look at his long-term care benefits.
I filed the claims for the current year and two prior years which resulted in payments of over $180,000 from their plan, plus retroactive refunds of the premiums paid from the time he was eligible to receive benefits.
Since maximizing your plan benefits can have a huge impact on your overall financial well-being, I'd highly recommend reviewing your plan to understand what it covers. Here are a few tips to get started.
Key Policy Features To Review
The best place to start is by looking at the policy’s Statement of Benefits or Schedule of Benefits. Here are the main sections to check:
Policy Maximums
This is one of the most important items to understand and plan around as it indicates the total
benefit amount or duration, such as a $250,000 cap or 3–5 years of coverage.
If you have a policy that offers “unlimited” benefits, contact the insurance company to find out exactly what is covered. You might be able to use your policy to get your food prepared and your home cleaned.
List of Covered Services:
You don’t need to be ready for a nursing home to take advantage of your plan. Benefits vary but often include:
home care
adult day care
assisted living
memory care
nursing home care
respite care
You don’t have to wait until you need full-time nursing care; you might qualify for other forms of assistance sooner.
Maximum Daily Benefit:
This cap on daily expenses can help in budgeting your care. For example, if your policy covers $350 per day, that could fully cover the cost of an assisted living facility costing $10,500 per month.
Knowing this limit helps you plan ahead and select a senior community, or in-home service that your plan will cover. However, keep in mind that costs may rise over time due to inflation and increasing care needs.
Inflation Rider:
If your policy includes an inflation rider, it may have grown in value since you first purchased it. For example, a $100 daily benefit twenty years ago could now be worth $200/day if compounded at 5% simple interest. If you don’t have a current policy statement, call the insurance company to request one.
Waiting Period (Elimination Period):
This is the number of days you’ll pay out-of-pocket before benefits begin, typically 90 days. Some plans have shorter waiting periods, some have longer—be sure to check yours.
Premium Waiver:
Once you begin receiving plan benefits, your annual insurance premium may be waived depending on your plan’s provisions. For example, some plans waive premiums if you’re receiving home care, while others require you to be in a facility. Some will still require you to pay the premium, even if you are receiving benefits.
Benefits for Types of Caregivers:
The rules about caregivers on a long-term care insurance policy are typically found in the "Benefits" section of the policy, specifically within the description of covered services, which will detail whether the policy allows for family caregivers, requires caregivers to be from a licensed agency, and what types of care services are covered by the policy. It is important to know what your policy will cover before you hire a caregiver. Once that caregiver is in place and you like them and don’t want to let them go, you may find out that your policy will not cover their services.
Hidden Benefits You Might Not Know About
In addition to care services, some policies cover benefits like:
ambulance transportation
emergency response systems
chore services
medical equipment
incontinence supplies
Understanding these extras can help you make the most of your plan and avoid unnecessary out-of-pocket expenses.
Not Your Grandmother’s Nursing Home: The New Take On Assisted-Living Communities
Many seniors are hesitant even to consider moving into a long-term care facility due to misconceptions of hospital-like places that are drab and dreary. But don’t let the term “facility” scare you.
Many long-term care facilities are adopting the term “community” and offer beautiful, resort-like settings with restaurant-style meals and social activities. Take time to explore local options; they may offer a supporting, comfortable environment.
Take Control Of Your Plan
It can be stressful to find care for a senior, especially if there are concerns about how to pay for it. Understanding what your long-term care insurance plan covers may relieve some of that stress, so review your benefits today.
I'd also recommend sharing your policy details with your financial advisor, and your accountant as your premiums may be tax-deductible if you itemize deductions.
If this process feels overwhelming, remember that help is available through your insurance provider, an eldercare attorney, or a daily money manager.
Need help taking control of your long-term care insurance? We, at Everyday Money Management can help. Contact us today!