Long Term Care Insurance: Market Trends, Alternatives, & Benefits Explained
Updated: Dec 4, 2020
What is Long Term Care?
Long term care refers to the services that are designed to meet a patients’ health and personal needs during a period of time in which they cannot do it on their own. These services can be provided by a variety of different in-home caregivers such as companion caretakers, home health aides, CNA’s, and registered nurses.
People often begin to need long-term care assistance when they have a debilitating health condition, disability, or natural age-related decline, and do not have any available help from family. In this type of environment, it becomes dangerous for them to be on their own.
How Do I Qualify To Use My Long Term Care Policy Benefits?
In order to qualify for long-term care insurance benefits of an existing policy, a medical specialist such as a Doctor or Nurse Practitioner must first assess the situation and decide if these are services that are truly needed. This decision is usually made based on whether or not the patient need help with at least 2 of the 6 ADLs / activities of daily living.
The 6 ADLs include:
Using the Toilet
Transferring to or from a bed or chair
Caring for incontinence
Your long term care insurance provider will give you a form to take to the Doctor with you and they’ll have to sign off saying that you need assistance with at least 2 of the 6 ADLs. After a potential 60-90 day waiting period, insureds will now be able to access the benefits of their long term care policy.
Why Traditional Long Term Care Insurance Is Changing
The baby boomer population continues to age and is staying alive longer, but not always in a healthy state. Many are staying alive longer than before due to advances in medicine, but alive and sick, which is causing more people going on claim than ever before. Because of this, traditional policies are not as profitable for providers to offer, and fewer companies are willing to compete within this space.
This is creating a situation for the insured where there are stiff premium increases annually on existing policies and the benefits offered in new policies are substantially less.
Thankfully, a tax law change approximately 9 years ago allowed the tax free death benefit of one’s life insurance policy to be accessible during life for the purposes of paying for long term care expenses (you must have a life insurance policy that has a clause for this.)These are referred to as hybrid life insurance policies.
Hybrid Life Insurance with Long Term Care
With this type of life insurance policy, there is an actual tangible value to one’s beneficiaries or estate in the event of them not using the death benefit for long term care purposes. In this instance, the full tax free death benefit would go the named beneficiaries. This is much more advantageous to the insured, rather than paying into a traditional long term care policy that has no value if you don’t use it.
Funding a hybrid life insurance policy also comes with greater flexibility than traditional long term care policies that are paid like car insurance. You can pay it up front, fund it over a period of years to be paid up, or pay it over a lifetime just to name some of the more basic ways to fund a hybrid life with long term care plan.
The same requirements as mentioned above are needed to accelerate the death benefit and be able to use it for long term care purposes. One must have a doctor’s note showing that they can’t perform at least 2 of the 6 daily functions of living.
Indemnity vs. Reimbursement?
Indemnity and Reimbursement refer how the funds are payable for the long term care expenses.
Reimbursement plans are more like health insurance and pay the provider of the long term care services directly. This makes it a little easier for the insured that is receiving care, but can also limit them to using only companies that are approved to accept insurance from that provider.
Indemnity plans pay an amount directly to the policyholder that they can use to pay the provider of services. A daily or monthly limit would be provided and it would be the responsibility of the insured to allocate those funds as needed. This allows for greater flexibility in who provides the care. It could be a licensed home health agency, a family member, or anyone else that the insured feels comfortable with.
How We Can Help
If you think your or a loved may qualify for Elderly long-term care services in the Boca Raton or Palm Beach area, we understand how difficult it can be to know what benefits are available under your current policy and how to get started.
We have a Florida Licensed Life, Health, and LTC Insurance professional who can evaluate your policy for free and offer guidance to make sure you or your loved one gets the most out of your current policy!
Of course, we’d appreciate your business and hope that you would choose us as your home health agency to provide these long term care services!
Our professional caretakers come with the following advantages:
Level II FBI background checks of all staff
Driving history checks
Homemaker Companions, Home Health Aides, & LPNs are our direct employees. Not independent contractors
Constant communication to patients, family, and care team
Registered Nurse supervision is ongoing with every care plan