When Should You Buy Long Term Care Insurance ##HOT##
The California legislature requires the Insurance Commissioner to annually prepare a Consumer Rate Guide for long-term care insurance. This website consists of an overview of long-term care insurance, the types of benefits and policies you can buy, both as an individual and as a member of a group, information on what to consider before purchasing a policy and the premium rate history of each company that sells long-term care insurance in California.
when should you buy long term care insurance
This website will help answer some of your questions about long-term care insurance. It explains why people may need long-term care and how this type of insurance can help cover the cost for care. Long-Term Care policies most often pay for benefits on a reimbursement basis which means that the payment will be made to you after you have received the covered care and/or incurred the costs and submitted a claim. However, there are some policies (typically more costly) that will pay a cash benefit. It is important to understand the coverage provided and how benefits will be paid/reimbursed before you purchase a long-term care insurance policy. When you receive your policy, be sure to read it and ask questions if there is anything in the policy that you don't understand. The Rate Guide explains how long-term care insurance is structured and what benefits you can buy. A qualified long-term care insurance agent or the Health Insurance Counseling and Advocacy Program (HICAP) can help you with these questions and many others.
Your personal risk of needing long-term care depends on many factors. Some of those are how long you may live, your health history and whether you have a spouse or family members who can provide some of the care you may need. If you feel you have a greater risk, you may want to consider applying for coverage while you are still able to qualify.
Depending upon the type of policy, long-term care insurance can cover any of the following: Care in a Facility that is not an acute-care hospital. Some of the terms used to describe "facilities" that can provide long-term care services include nursing homes, Residential Care Facilities and Residential Care Facilities for the Elderly (sometimes called Assisted Living Facilities), skilled nursing facilities or Intermediate Care Facilities. Home Care including Home Health Care, Personal Care, Homemaker Services, Adult Day Care, Hospice Services or Respite Care. (Some Hospice and Respite care can also be received in a facility like a nursing home).
The California Partnership for Long-Term Care (the Partnership), a program of the California Department of Health Care Services (DHCS), is an innovative partnership among consumers, the State of California and a select number of insurance companies, plus the California Public Employees Retirement System (CALPERS). These insurers offer a special type of long-term care insurance policy, commonly called "Partnership" policies, that must meet certain requirements set by the DHCS. Insurance companies participating in the Partnership program must have their Partnership policies approved by both the Department of Insurance and the DHCS. Additionally, only insurance agents who have received special training are able to sell you a Partnership policy and to advise you as to whether the Partnership program works for you. Be sure to confirm that your agent has this special certification to sell Partnership policies.
Each Partnership-approved policy includes insurance benefits to cover the care you may need and automatic inflation protection to ensure that the benefits keep pace with the rising cost of care. Partnership policies also have other important features that are not required in other long-term care insurance policies. To learn more about these policies and the companies that are approved to sell them, call the Partnership for free brochures at 800-CARE445 (800-227-3445).
Congress passed legislation effective in 1997 that established the tax treatment of premiums paid for and the benefits paid/reimbursed by long-term care insurance policies that met certain federal standards. This legislation is called the Health Insurance Portability and Accountability Act or HIPAA. Long-term care policies that use the federal standards to cover benefits are labeled as "Federally Tax Qualified". Some or all of the premiums for these federally tax qualified policies may be deductible as a medical expense on your federal and California income tax returns (depending on your age and the amount of annual premium).
Policies sold as federally tax qualified long-term care insurance use a standard of eligibility for benefits that may be stricter than the standards established in California for non-qualified policies. It may be easier to qualify for benefits from non-tax qualified policies that use the standards established by California.
If you have questions about the tax status of a policy you own or one you are considering buying, your long-term care insurance agent can advise you. If you have specific questions pertaining to how the purchase of tax qualified long-term care insurance will impact the deductions you take or the taxes you pay, you should talk to your tax advisor to see how it will affect your individual taxes.
An individual long-term care insurance policy is a contract between you and the insurer. These policies must be approved by the California Department of Insurance (CDI) and have all of the consumer protections required under California law. Individual policies are "guaranteed renewable" and cannot be canceled by the insurance company unless the premium is not paid on time. However, every company has the right to increase the premiums it charges with proper notification and approval from the Department of Insurance.
Group long-term care insurance is a contract between an insurer and a group such as an employer on behalf of its employees or a trade or professional association on behalf of its members. If you are covered under a group plan, you receive a "certificate" rather than a "policy" of insurance. Also, many of the policy terms have already been negotiated by the group, and the group (called the "master policyholder") has the option to terminate the policy at any time. Often, but not always, group insurance is less expensive than individual insurance. If group coverage is terminated, you have the right to continue the coverage or buy a conversion policy depending on the provisions of the policy and other factors. If you purchase group coverage, ask about what options will be available to you if the group cancels the policy or if you lose your membership or eligibility.
Insurance policies describe what they will cover, what kind of care they will cover, who can provide the care and conditions that need to be met before a company will pay/reimburse the cost of benefits. Described below are the services required in a long-term care insurance policy approved under current California law. Be aware however, that California law has changed many times over the years and that insurance policies sold in previous years may have different requirements than are shown here.
In California, most skilled, intermediate and custodial care is received in nursing homes that are licensed as "skilled nursing facilities". All long-term care policies except Home Care Only cover this kind of care.
Policies sold after October 2001 (except Home Care Only policies) are required to include a benefit to cover care in an RCF/RCFE. Some insurance policies sold before October 2001 may also include this benefit. RCF/RCFEs are not nursing homes but living arrangements wherein a person can also receive personal care or supervision. Some RCF/RCFEs are large retirement homes while others are small group homes.
Every long-term care insurance policy called "Home Care Only" or "Comprehensive Long-Term Care" must include at least the following 6 Home Care benefits and other consumer protections which should make it easier to receive care at home.
This is a plan written by your doctor or a medical team that establishes your need for care, describes the kind of care you need and the frequency of the required services. The Plan of Care is a familiar document to your doctor, hospital discharge planners, home health agencies and other health care providers who know about long-term care services. Many policies also require that the Plan of Care be updated periodically to reflect any change in your need for care.
The elimination period (sometimes called a "Waiting Period" or "Deductible Period") is the period of time you must wait after you qualify for care and are eligible to receive benefits before the company will begin paying or reimbursing you for your covered care. You choose the length of the Elimination Period when you buy the policy. The most common options are 0 days, 30 days, 90 days or 100 days. Some policies only make you meet the Elimination Period once during the life of the policy; others apply it again after you have gone for a certain period of time without needing care. In some situations the elimination period will be satisfied by a day of either in-home care or institutional care. The premiums are usually higher for short elimination periods and lower for longer ones. Be sure to ask your long term care insurance agent to explain these very important differences.
The premium cost is usually higher if you choose the shorter Elimination Periods and is lower if you choose a longer period. In addition, a premium might be higher if the company uses a more liberal "counting" of home care Elimination Period days. Also, make sure that the Elimination Period days that are accumulated either in a home care or institutional care setting are combined to satisfy your overall elimination period. Be sure to ask your long term care insurance agent to explain this.
It is important to understand the coverage provided and how benefits will be paid/reimbursed before you purchase a Long-Term Care Policy. If you decide to buy a long-term care insurance policy, you will select a maximum daily benefit. It is important to note that the minimum home care daily benefit you can select in California is $50 a day. There is no minimum daily benefit for facility care. 041b061a72