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
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
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
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.