Long-Term Care Policy Options

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There are various long-term care policy options from which to choose. It is important to consider the options best suited to your needs.

Core Benefits

Your Benefit Account
Your total benefits are based on a monthly maximum you select that can range from $50 to $500 per day (some policies will state this as a monthly maximum of $1,500 to $15,000). Those benefits are then limited to an overall policy maximum that you select. For example, if you select a $200 per day option with a $365,000 policy maximum and you draw the maximum $200 per day, your benefits would last for 5 years before you exhaust them. If you were to only need $100 per day, it would take you 10 years to exhaust your $365,000 policy maximum.

Elimination Period
This is the policy deductible and is stated as the number of days you are otherwise eligible to receive benefits before the policy begins to pay. This can be anywhere from 0 to 365 days, but most people select 30, 60 or 90 day elimination periods. As with deductibles on other types of insurance, the lower your elimination period, the higher your premium.

Growth Rate
This is the most important feature to consider. This determines how fast your policy benefits will grow over time to keep up with rising costs. Long-term care is not health care, so long-term care services tend to increase at a rate different from overall health care costs. In fact, long-term care costs have trended most closely to the cost of housing and labor, since the care is typically based on care in a facility or custodial care provided by an individual. Most policies allow you to choose from options that do not increase your benefits; increase them at a simple or compound inflation rate (5 percent is the most common option); or to increase your benefits based on the Consumer Price Index. This can be the most important feature of your policy. If you purchase a plan that provides $200 per day, $365,000 policy maximum, at 5 percent compound growth rate, in 15 years that plan provide up to $416 per day and $758,809 in maximum policy benefits. In 21 years the maximum benefits would exceed $1 million.

Benefit Period
The benefit period determines how long your long-term care insurance policy will continue to pay for your care. Benefit periods can be a set number of years, dollars or benefits.

Other Options

Survivorship Benefits
In the event of the death of a spouse, the policy for the surviving spouse will be paid in full.

Restoration of Benefits
If you use part of your benefits, recover, and do not use any long-term care for a specified period of time (usually 6 months), your benefits will be restored in full.

Waiver of Premium
This option gives you the ability to stop paying a premium once you are in a nursing home and benefits become effective. Some plans also waive premiums if you are receiving home care.

Shared Care
This option offers financial flexibility in paying for long-term care expenses by allowing a couple to pool their benefits. The shared pool can be accessed by the spouse needing the care.

Exclusions And Limitations

• A mental or nervous disorder or disease (other than Alzheimer’s disease, dementia and senility).
• Illness or injury caused by an act of war.
• Treatment already paid for by the government.
• Illness or injuries from attempted suicide.