Long-Term Care Policy Options and Extras

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Long-Term Care Policy Options and Extras

A long-term care (LTC) insurance policy is probably not suitable for anyone who has much question about its affordability—now or in the future. In this situation, a person might be better off buying less-generous coverage at a lower cost, or buying none at all. In this article we will explore some of the extras, which might add cost to the policy, but which should be considered.

Non-forfeiture benefit

This option is intended to ease some policybuyers’ worries about their ability to pay for long-term care (LTC) insurance in the future. They fear losing the policy someday because they can no longer afford it, losing entirely both their LTC coverage and the premiums paid over many years. The non-forfeiture option gives the policyholder "something" even if he or she stops making payments after several years.

There are two drawbacks to purchasing the non-forfeiture benefit, however. First, the substantial price of this protection (an additional 30% of the basic policy cost, for example) immediately makes the premium a much greater burden forever. Second, the "something" provided to a policyholder who can no longer afford the premiums is very limited—usually not enough to put a dent in the increased cost over many years into the future.

Alternate plan of care

LTC insurance benefits can be paid for an unconventional expense not directly mentioned in the policy, such as installation of a wheelchair ramp or bathroom modification to allow the insured to stay at home. Most persons would rather stay at home than go to an institution, so insurance companies are motivated to seriously consider these kinds of alternatives to satisfy the policyholder as well as by the prospect of saving money.

When this provision is offered, it is generally included in the basic policy. It can be a valuable commitment by the insurer to work with you in arranging care that satisfies your needs outside a nursing home. This feature builds flexibility into the policy and enables your coverage to adapt to the healthcare delivery system of the future.

• Respite care. Insurers want to encourage arrangements in which insureds’ LTC needs can be met at home by family caregivers for as long as possible. Often, however, stress and other commitments demand that these family members take a break. During such a respite, this benefit covers the cost of professional care up to a limited number of days (e.g., fourteen).
• Bed reservation. Some policies will pay to hold your bed in a nursing home or other facility for a limited time if you require hospitalization. A few pay even if the insured leaves to visit family briefly.
• Caregiver training. To further encourage family caregiving at home, most policies offer basic instruction on patient-moving, injections, taking vital signs, etc. to those in the household who will be participating in the insured person’s care.
• Care (or case) coordinator (or manager). A care coordinator is an advocate for the insured while receiving benefits. The care coordinator assists with developing a plan of care, making arrangements with care providers, and monitoring their performance. This can be an especially valuable benefit when the insured has no family nearby to do the job.

Some policies will pay the cost of a care coordinator of your choosing with part of your daily benefit. However, if this person works for the insurance company, care coordination services do not reduce other policy benefits.

Some critics see this as a potential conflict of interest: if the care manager gets a paycheck from the insurance company, that could provide an incentive to serve as a gatekeeper between the insured and LTC services rather than as an advocate. While that might be a legitimate concern in some situations, generally it should not be. Remember that the care coordinators and managers enter the picture only after eligibility for benefits has been decided. They are not involved in that crucial determination. Moreover, compared to an individual independent care manager, a company-employed care coordinator may have more clout with providers or access to helpful feedback about them from other insured families.

Marital features

If both spouses buy a policy at the same time, some companies will discount their total premium. Some policies provide that after a number of years (e.g., ten), if one spouse dies, the other’s policy will be paid up. Many companies will waive the premium for both of them after either qualifies for such a waiver.

Some policies allow spouses who buy identical policies to share their pools of money with the other; so a spouse on-claim can dip into the other’s benefits if that seems necessary and appropriate for them, giving a larger benefit to one spouse if needed. Assume, for example, that each had a policy with a $100 daily benefit and a benefit period of three years. If one spouse required LTC beyond three years, the couple could elect to use one or more of the other spouse’s three years for the first spouse’s care.