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43 Cards in this Set
- Front
- Back
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Long-Term Care (LTC) pt. 1
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• Long-term care pays for the kind of care needed
by individuals who have chronic illnesses or disabilities • It often covers various costs – Nursing home care – Provides coverage for home-based care • Visiting nurses • Chore services • Respite care for daily caregivers • Proceeds of qualified long-term care policies are generally received income tax-free |
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Long-Term Care (LTC) pt. 2
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• Premiums may be deductible as a medical
expense, within certain limitations • Federal law now – determines what constitutes a qualified long term care policy eligible for these tax advantages – spells out when benefits must be paid – spells out what options must be offered to prospects |
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Long-Term Care (LTC) pt. 3
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• Insurers are not required to offer and consumers
are not required to purchase qualified policies – Nonqualified policies may offer benefits that are more attractive or easier to obtain – Nonqualified policies may be more desirable to certain consumers even if they do not offer the tax advantages |
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LTC, Medicare, and Medicaid Compared pt. 1
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• Medicare
– Not designed to provide custodial care – Will cover nursing home care if it is part of the treatment for a covered injury or illness, but care needed because of aging is not covered – Covers a limited amount of rehabilitative care in a skilled nursing facility approved by Medicare • Requires prior hospitalization before admission to the skilled nursing facility • No benefits are provided after the 100th day |
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LTC, Medicare, and Medicaid Compared pt. 2
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Medicaid
– Requires the individual to prove financial need • Normally requires that the individual get rid of financial resources and spend down to a poverty level |
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Who Needs Long-Term Care Insurance pt. 1
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• Protection of personal assets may be the most
important reason for purchasing long-term care insurance • The purchase of long-term care insurance to protect one’s personal financial resources may be a wise financial decision – Can help prevent a substantial reduction in a person’s assets and retirement income – Can help maintain a person’s standard of living |
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Who Needs Long-Term Care Insurance pt. 2
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• Long-term care insurance provides that a
person’s financial resources need not be liquidated to satisfy Medicaid eligibility • With life expectancy increasing in the United States – The likelihood of a nursing home confinement increases as age increases |
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National Association of Insurance
Commissioners (NAIC) Model for Long-Term Care |
• Developed to help state legislatures in an effort
to keep regulation on a state level • More than half the states currently using the NAIC or similar model |
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NAIC Model for Long-Term Care
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• Key long-term care issues include
– A Benefit period of at least one year – Strict restrictions on cancellation, specifically prohibiting cancellation because of the insured’s aging • Most now guarantee renewability – Standards for covering preexisting conditions – Free look period – Prohibition of exclusions for Alzheimer’s disease |
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Rating Factors
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• Long-term care policies differ from other health
plans in how risks are rated – The key for Long-term care policies is whether an individual can perform the activities of daily living (ADLs) and, if so, with what degree of proficiency • ADLs are dressing, bathing, eating, transferring, toileting, and continence – Example: an individual who has a heart disease but is still able to perform all the ADLs would likely • be rated as a substandard risk under a major medical policy • be rated as a standard risk for a long-term care policy |
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Skilled Nursing Care
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• Nursing and rehabilitative care that is required
daily • Can be performed only by skilled medical practitioners on a doctor’s orders |
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Intermediate Care
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• Nursing and rehabilitative care that is required
occasionally • Can be performed only by skilled medical practitioners on a doctor’s orders |
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Custodial or Residential Care
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• Help in performing ADLs
• Can be performed by someone without medical skills or training, but still must be based on a doctor’s orders – Type most elderly people will require at some time in their later years – It is also the type that is not covered by Medicare |
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Home Health Care
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• Services performed from time to time in the
individual’s home – May include skilled nursing, various types of therapy, help with ADLs, and help with housework |
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Adult Day Care
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• Provides company, supervision, and social and
recreational support during the day for people who live at home and are functionally impaired adults – Typically, adult day care includes transportation to and from a day care center and a variety of health, social, and related activities – Includes meals and certain medical services – Usually included is specialized care for patients with Alzheimer’s |
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Hospice and Respite Care pt. 1
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Hospice care is often offered as an optional
benefit – Primary focus is pain control, comfort, and counseling for the terminally ill patient and their family • Typically, the expenses incurred in a hospice will be room and board and medication for pain |
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Hospice and Respite Care pt. 2
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Respite Care
– Covers the cost of replacing the primary caregiver who is looking after an elderly person in the home • Only for short periods – Two options • The patient is admitted to a nursing home for needed care for a short period • Substitute care provider moves into the insured’s home for that short, temporary period |
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Eligibility to Purchase
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• Most minimum ages range between 50 and 60
– May include a much lower minimum age such as 18 • Upper age limits at which policies may be purchased range from age 69 to 89 |
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Guaranteed Renewability pt. 1
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• The current generation of long-term care policies
are guaranteed renewable – Cannot be canceled except for nonpayment of premium • Insurer does reserve the right to increase premiums in accordance with the policy provisions – Premiums will be changed on the policy anniversary – Increased premium will be for an entire class of insured, not just a single individual |
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Guaranteed Renewability pt. 2
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• Some long-term care policies are noncancelable
– Insured has the right to continue the coverage by timely payment of premiums – The insurer has no right to make any change in policy provisions • Cannot decline to renew • Cannot change the premium rate at renewal for any reason |
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Premiums
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• The cost for a long-term care policy is based on
a number of factors – Insured’s age and health – Type and level of benefits provided • Longer the elimination period, lower the premium • Longer the benefit period, higher the premium • Higher the benefit amount, higher the premium – The inclusion or absence of a deductible or probationary period • The length of that period – Whether or not options or riders are included with the policy |
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Waiver of Premium
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• Nearly all long-term care policies include waiver
of premium that takes effect after the insured has been confined for a specified period of time – The usual period is 90 days, but it is as long as 180 days in some policies – Premium payment generally resumes when the care ceases |
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Benefit Amount pt. 1
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• Maximum daily benefit amount for a nursing
home stay or covered home health care – Higher daily benefits mean higher annual premiums – Reimbursement for charges up to the stated limit, but not more than the daily limit • Maximum policy benefit – Calculated by multiplying the daily benefit by the number of days in the benefit period |
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Benefit Amount pt. 2
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• Some insurers provide coverage on an expense
incurred basis – Full reimbursement for the actual charges incurred • Many policies specify the dollar amount per day that will be paid for skilled nursing care |
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Benefit Amount pt. 3
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• Some policies may include sublimits for special
types of care or services (i.e., home health care or adult day care) – Usually a fixed percentage of the specified daily benefit (i.e., 50%) – There may be a deductible amount that must be satisfied before the policy begins to pay |
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Benefit Period
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• Maximum period for which benefits will be paid
– Usually from three to five years • Unlimited benefit periods available • Some policies may contain both a benefit period per stay plus a lifetime maximum benefit period |
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Benefit Triggers
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• The activities of daily living (ADLs) are used
as measurement standards to determine the level of personal functioning capacity • Based upon how expressed, the ADLs include – Mobility, or transferring—the ability to walk – Dressing – Personal hygiene, or toileting and continence – Eating—being able to take in food – Bathing |
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Elimination Period
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• Period at the beginning of a confinement in a
long term care facility during which no benefits are payable • Defined as a time deductible • Length of the elimination period chosen by the insured from the options available from the insurer • The longer the waiting period, the lower the premium, all other facts being equal |
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Exclusions pt. 1
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• Each policy should be read carefully to
determine what is excluded • Most policies now cover Alzheimer’s disease and organic-based mental illness, which were formerly often excluded |
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Exclusions pt. 2
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Common exclusions which still remain include
– War and acts of war – Alcohol or drug dependency – Self-inflicted injuries – Mental illness and nervous disorders without a demonstrable organic cause – Treatment provided without cost to the insured • Such as that received in a veterans hospital |
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Preexisting Conditions
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• Most, but not all, long-term care policies do not
cover conditions that existed during the six months before the policy effective date |
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Optional Provisions and Riders pt. 1
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• Inflation protection
– Many states require that insurers offer optional inflation protection at the time of policy purchase • Feature must – Either increase benefit levels annually or cover a specific percentage of actual or reasonable charges – Or allow the insured to periodically increase benefit levels without needing to provide evidence of continued insurability |
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Optional Provisions and Riders pt. 2
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Guaranteed insurability
– Allows the insured to purchase additional insurance at later specified dates without having to prove insurability – If insured exercises this option, the additional premium will be based on their attained age |
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Optional Provisions and Riders pt. 3
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• Nonforfeiture benefit
– Designed to ensure that if insured lapses their policy (i.e., stops paying premiums) after a specified number of years they will retain some benefits from the policy – Qualified policies must offer this benefit – Currently, two common types of nonforfeiture benefits that can be purchased • Reduced Paid-Up Benefit • Shortened Benefit Period |
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Optional Provisions and Riders pt. 4
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• Nonforfeiture benefit (continued)
– Reduced Paid-Up Benefit • If insured lapses the policy after a specified number of years, policy will continue with reduced benefit amounts • In summary, provides reduced benefits for the original term of the policy |
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Optional Provisions and Riders pt. 5
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• Nonforfeiture benefit (continued)
– Shortened Benefit Period • If insured lapses the policy after a specified number of years, policy will continue to cover the same benefits that would have been covered under the insured’s policy until the benefit amount is exhausted – Same amounts and frequency in effect at time of lapse – Similar benefit was offered in the past known as an “Extended Term Benefit” • In summary, provides full benefits for a reduced period of time |
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Qualified Plans pt. 1
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• A qualified long-term care policy must stipulate
that the insured be incapable of performing at least two of the ADLs without assistance for at least 90 days to qualify for benefits • A physician must certify that the insured is chronically ill and provide a plan of care – A chronic illness is one that is treatable, but not curable – An acute illness is a serious condition, but the body can recover with proper medical attention |
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Qualified Plans pt. 2
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• New federal standards that determine whether a
long-term care policy is tax qualified require consumer protections – Offer inflation protection – Offer nonforfeiture provisions – Imposing additional disclosure requirements |
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State Law
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• Frequently regulate minimum standards
• Renewability • The insured’s right to return the policy • Replacement • Marketing standards • The appropriateness of recommending the purchase of long-term care insurance • Delivery of a buyer’s guide and outline of coverage is mandatory |
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Federal Law
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Allows the sale of long-term care that
“substantially” duplicates that provided under Medicare or Medicaid to Medicare beneficiaries, provided – no multiple policies – company must disclose the duplication – policy must pay without regard to other benefits |
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Marketing LTC Coverage
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LTC coverage offered in several ways
– As an individual policy – Group long-term care plans – Attaching as a rider to a life insurance policy • Called an accelerated benefits rider or a living benefits rider • Additional premium is required for this benefit • Takes into consideration – Outstanding loans against the life policy – Accelerated benefits paid out are subtracted from the death benefit paid to the beneficiary when the insured dies |
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Outline of Coverage
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• Must be given to the applicant at the time of
initial solicitation and must include – A description of the principal benefits – A statement of the exclusions and limitations – An explanation of the relationship of cost of care and benefits – The terms under which the policy may be returned and the premium refunded – The terms under which the policy may be continued in force – A statement of the total annual premium |
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Shopper’s Guide
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• Must be provided to all prospective applicants
prior to the presentation of an application or enrollment form (for agent solicitation) • Must be provided in conjunction with any application or enrollment form (for direct response solicitations) • Must be based on the guide developed for longterm care products by the National Association of Insurance Commissioners |
