Home Health Care (HHC)
Most of the Long Term Care Insurance plans sold in the past ten years offer home health care. Not only is it important that your plan includes HHC, it is also important that your plan pays 100% of your benefit amount. Additionally, because some policies pay for skilled care only (caregivers licensed with the state or registered with a home health care agency--nurses, for example), it is important that your plan also pays for custodial caregivers (caregivers who provide cooking, light housekeeping, laundry, etc.).
Genworth Financial is a carrier who, in our opinion, offers one of the richest HHC plans. John Hancock recently added improved home care benefits to many of its policies as well. With Genworth and some newer Hancock plans, home care aid does not have to be provided by a licensed caregiver. In this case, the policies may pay for services a custodial caregiver can provide.
Facility Care Coverage in Nursing Home or Assisted LivingAll Long Term Care Insurance policies cover care received in a nursing home or assisted living facility at either a daily or monthly rate. The benefits cover room and board, skilled and/or custodial care in a facility.
Benefit PeriodSimply put, the benefit period is how long your Long Term Care benefits will last, which in turn depends on the number of years of coverage you choose in your plan. Most companies offer plans of 2, 3, 4, 5, 6, and 10 years, as well as unlimited (lifetime) coverage. 92% of all Long Term Care claims are for three years or less, according to the claims department at Genworth Financial. Most people choose a plan that will cover at least three years.
Automatic Inflation Protection
Automatic inflation protection is the most important Long Term Care Insurance rider because it keeps your benefits in pace with inflation while protecting your purchasing power.
There are three types of automatic inflation protection: 5% compound inflation protection, 5% simple inflation protection (or sometimes called 5% equal inflation protection), and future purchase option or CPI inflation protection (this particular rider gives the policy holder the option to buy more coverage in the future without having to prove insurability).
There are a handful of companies that offer 3% or 4% compound inflation protection, but be sure to remember that medical costs typically rise faster than core CPI. More details on inflation protection can be found here.
Elimination Period (also known as your Deductible)
The elimination period is the time that has to pass before the Long Term Care Insurance will begin paying benefits. Most companies offer a 0-, 20-, 30-, 60-, 90-, or 180-day elimination period. The longer the elimination period the lower your premium will be.
The definition describing the elimination period varies with the different Long Term Care Insurance companies. Most policies require the elimination period to be consecutive days of care. Be sure to read and understand the elimination period in your Long Term Care Insurance policy because the contract will not pay until the deductible has been satisfied.
Maximum Policy Value or Pool of Money
Your policy will provide a maximum policy value in dollars. This is the amount of liability the insurance company is responsible for in regards to your policy. Some Long Term Care Insurance policies refer to this as your "pool of money."
A Long Term Care Insurance policy with a pool of money will allow you to stretch the benefit years if you do not take out the maximum daily or monthly amount. For example, a $100/day policy for 3 years has a maximum value or pool of money totalling $109,500. If you regularly pulled out $100 a day each and every day, you could exhaust the policy. However, if you pulled out less, say $50/day, your policy would last as long as 6 years because you were pulling out half the daily amount.
Under the Indemnity Long Term Care Insurance Payment option, the Long Term Care Insurance company will send you a check for the policy's full daily or monthly benefit, regardless of whether or not the actual expenses were less. If there is money left over, then you can spend it anyway you see fit.
Shared Benefit Coverage for CouplesThis optional rider allows couples to share each other's benefits. If one spouse needs Long Term Care and runs out of money in their policy, they then can dip into their spouse's policy and use their benefits.
Waiver of PremiumWhen the time arrives for you to need Long Term Care, the last thing you want to worry about is paying the premium for your policy. Most of the top companies will waive your premium once you begin receiving benefits.
Return of Premium BenefitThis benefit is a rider some companies offer that will return all or a portion of the Long Term Care Insurance premiums paid back to your beneficiary at your death. There are different options available with this rider depending on the company, so be sure to ask questions and look at several companies.
Survivorship BenefitThis Long Term Care Insurance rider is for couples. Depending on the option, when either 7 or 10 years pass, if no claims have been paid when one spouses dies, then the other spouse has full benefits and never has to pay premiums again.
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