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Levels of Care
This is a crucial factor in choosing coverage. There are actually four categories: “skilled care,” “intermediate care,” “custodial care,” and “home health services.” When affordable, coverage should be obtained that provides for all levels of care.
Benefit Amount and Duration
The benefit amount should be evaluated according to the projected need, and the ability to pay for the care from other sources. The length of time the policy pays benefits can range from a number of months to life. The benefit period should cover a majority of likely admissions. With the average nursing home stay exceeding 2.5 years, a benefit period of 4 years is currently recommended.
Inflation Protection
Many companies offer benefit levels that increase by the rate of inflation or some cost index factor. With medical costs rising at nearly twice the rate of inflation, such options may prove valuable.
Waiting Period and Prior Hospitalization
The length of time from the onset of disability until the time when the insurance company begins to pay is an important factor in premium cost. For example, a one-month waiting period will have a high premium; and a period of 3 to 6 months will have a correspondingly lower premium.
Waiting periods should be reasonably short, 30, 60 or 90 days depending upon the individual’s ability to pay for a short stay and the added premium costs of a short waiting period. Do not buy a policy that requires a hospital stay to be eligible for benefits. You should be able to collect even if you directly entered the nursing home.
Coverage Limitations and Qualifications
Benefits should be paid for all medically necessary confinements and use reasonable definitions, or ADL’s (activities of daily living) to qualify for coverage. Alzheimer’s and other organic conditions that are not medically “verifiable” should specifically be covered and written in the policy wording.
Guaranteed Renewable, Non-Cancelable Level Premiums
Make sure you can renew your policy for as long as you need it, and that the insurance company guarantees this provision. Many better policies contain a non-cancellation provision. We recommend that you obtain a policy with this provision, as well as those that provide adequate guarantees against future premium increases.
Waiver of Premium
Better policies waive the necessity to pay premiums while you are receiving benefits. Look for policies with this provision.
Pre-Existing Conditions and Eligible Facilities
Most policies delay coverage for medical conditions that occur before, or are present at the time of application. Look for the shortest delay possible.
Make sure the policy pays for confinement in a State Licensed Facility and that it does not require a Medicare approved facility.
Sources: www.ahca.org
GE Financial, Long Term Care Division, GE Long Term Care Insurance Nursing Home Survey, March 2002.
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