August 3, 2016

Over the past 22 years, I have helped many clients file for benefits from their long-term care insurance policies. In almost all instances, the one thing that surprised me the most was their hesitancy to do so without some convincing from me. The reason — they wanted to save their benefits for the future.

My client Evelyn bought her policy 15 years ago. Now 82 years old and on oxygen 24/7, she finds it difficult to get dressed and take a shower . She also has problems doing laundry, cooking and cleaning. Even though she met the policy criteria for filing a claim, she would not do so for some time. She wanted to save her benefits in case “things got worse.” In reality, by receiving care, she was safer, more independent, less stressed and hopefully delayed further decline of her health.
According to the American Association for Long Term Care Insurance, LTCI companies paid more than $6.6 million in benefits to 264,000 policyholders in 2012.

In order to trigger your benefits, you must meet certain criteria. If you are frail and only need someone to clean the house or do the laundry, you will not qualify for benefits. Your doctor has to certify that you need assistance with two out of six activities of daily living (bathing, dressing, transferring, eating, toileting or continence) or supervision due to a cognitive impairment such as Alzheimer’s. All this should be documented by your physician who will also need to provide a plan of care outlining the type and frequency of services you will need.

The average claim takes about 21 days to process. Notify your carrier as soon as you plan to receive services. Claim forms will be sent to you to forward to your physician and service provider. Your medical records and an assessment will need to be obtained by the insurance company. All this takes time and time is of the essence when you need care.
There are two policy features to familiarize yourself with once you decide to initiate a claim.
The first is your elimination period (EP). It’s similar to a deductible. It is the amount of time you will have to pay out-of-pocket before the policy starts to pay benefits. Generally, it is 30, 60, 90 or 100 days.
The EP can be based on service or calendar days. If it is based on service days this means for every day you receive a service you will earn one day credit toward your EP. If you have a calendar day EP, you will receive credit even for a day no service was provided. For example, if you had home care three days in a week, you would still receive 7 days credit towards your EP. Note that some companies require a minimum amount of hours of care to receive EP credit.
There are policies that waive the EP at the start of home care. This can be a standard feature in your policy or you might have added it as a rider.

Secondly, be aware of who is qualified to provide home care.

All LTCI policies will allow you to hire nurses, therapists, home health aides and homemakers from an agency. Others will allow you to use independent caregivers who are properly trained/licensed or certified. Still others will allow you to use uncertified/unlicensed/unskilled care from friends and neighbors.

It is extremely important to know what qualifications caregivers need in order to receive benefits. This distinction is sometimes overlooked and a claim is denied. It is discouraging and frustrating when you hire someone only to find out that your policy considers them unqualified to care for you.

Policies can offer an alternate cash benefit for home care. This benefit is often times a percentage of your home care benefit, such as 30% or 40%. The feature generally requires no elimination period or submission of receipts. It gives you the ability to hire anyone, including family members.

Lastly, contact the agent who sold you your policy and grant that person permission to have access to your information during all stages of the claim process. Your agent can be a very valuable advocate.
Denials occur because policyholders don’t remember or understand the features in their policy. Have a review of your policy every five years. Include your adult children. This way, everyone is prepared and knowledgeable, if and when the time comes to file a claim.