Evaluating a Long-Term Care Policy

Here’s a checklist that you can use to evaluate your current policy, or to compare a new policy before you buy:

 

• What is the daily benefit amount for nursing home care?  Make sure it’s enough to cover the cost of care in your community.  
• What types of care alternatives are covered?  Look for home health care, home health care aides, adult day care, assisted living facilities and respite care.
• What is the daily benefit amount for home health care or other alternative types of care?  This should be at least 80% percent of the benefit for nursing home care.
• Are home care benefits subject to a daily, weekly or monthly maximum benefit?  A policy with a weekly or monthly benefit limit may pay more in benefits that a policy with a daily limit.
• How is eligibility for benefits determined? Policies typically require you to need assistance in performing activities of daily living (ADLs) such as eating, dressing, bathing, etc. or diagnosis of a cognitive impairment.
• What is the maximum benefit?  This may be the length of time the policy will pay for care, or it may be expressed as a maximum dollar amount.  Ideally, benefits should last 4 years or more.
• What is the waiting period before benefits begin? Similar to the deductible on your auto insurance, this is the cost you pay out of pocket.  A longer elimination period can lower your premiums.
• Does the benefit amount increase with inflation?  An inflation protection benefit is especially important if you purchase a policy before age 65.  Usually there is a substantial added premium for this feature.
• Are premiums waived while you are receiving nursing home care?  Are premiums waived if you are receiving home health care?
• Is the plan guaranteed renewable?  This means the company can’t cancel you as long as you pay your premiums.
• What are the limitations for pre-existing conditions?
• Does the policy have a return of premium feature?  This means your premiums may be refunded under certain conditions, such as not filing a claim.  Usually there is a substantial added premium for this feature. 

Note: This is a general description of long term care insurance features and benefits.  Specific benefits and limitations are determined by the actual policy language. 

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