Senior living communities are finding that a greater percentage of their residents currently possess long term care insurance more than their resident populations of 10 to 15 years ago. To effectively train staff and educate residents and their families, it’s vital that administrators are aware of long term care insurance. To answer the question, “What is long term care insurance?” we must take a deeper look at coverage and requirements.

What Does Long Term Care Insurance Cover?

Long term care insurance coverage is customized to each individual. Policies may cover:

  • Nursing home care
  • Assisted living or personal care facilities
  • Home health care
  • Adult day care

However, long term care won’t necessarily cover all of the options. Because of this, it’s important that residents and their families understand what their policies do cover.

To avoid misunderstanding and disappointment down the road, it can be helpful to review policies with families, residents, and prospective residents. To ensure that they understand how your facility is licensed and what their policy requires, request that they bring in their policy for review.

What Are the Assisted Living Insurance Requirements?

Many policies have a waiting or elimination period that requires residents to receive care prior to the policy paying out. Most often, residents must receive care anywhere from 20 to 100 days ahead of time.

assisted living caregiver helping resident with their beverage

Policies also usually require that the resident is receiving help with two or three activities of daily living such as:

  • Bathing
  • Dressing
  • Toileting
  • Continence care
  • Transferring
  • Ambulating
  • Eating (being fed by a caregiver, not food preparation)

Ironically, the most common reason a resident needs assisted living care is for medication administration, which is rarely considered to be an activity of daily living. The level of assistance needed is also something to take into account. Does the resident need standby assistance or hands-on assistance? Do the activities require help every time they’re performed? In addition, most policies have a provision for memory care where residents must be placed in a protected environment.

Tackling Long-Term Care Insurance Claims

Over the years, many companies have liberalized the administration of policies that only covered nursing homes. Now, most include assisted living facilities or personal care homes.

However, when many policies were first issued, assisted living facilities were not in existence and alternative care benefit provisions could have been put in place. There is no harm in filing a claim for residents, but facilities should be upfront with them so they understand that the policy requires a different type of licensing and the claim may be denied.

Remember, long term care insurance claims can always be appealed or resubmitted when the level, care, or facility type changes. Unfortunately, some residents make the mistake of canceling the policy if a denial is received. This can be detrimental to families and residents who have faithfully paid thousands of dollars in premiums for coverage, just to be denied when care is needed the most.

As hard as it may be for residents and families to bite the bullet and continue paying on their policies, you should reinforce the need to keep the policy in motion. It’s not a question of “if” the care needs will increase over time, but “when” they’ll increase. When they do, the claim can be resubmitted. If the resident appeals a claim and the insurance company upholds their decision to deny, they can always appeal to the state’s insurance commissioner.

Senior Care Insurance Premiums

Residents may find over time that premium increases make it difficult to keep policies. Before they cancel their policy, encourage residents to contact the insurance company. They can inquire about potentially modifying their policy to preserve it and maintain or reduce the premium. Insurance companies will often agree to remove an inflation rider and decrease the daily benefit or length of coverage. This will ensure that the coverage will be affordable enough for them to keep the policy in place in the event of a future claim.

The Future of Long-Term Care Insurance

What’s ahead for long term care insurance? Most companies no longer offer the type of coverage seniors currently have, but a hybrid that combines long term care insurance and life insurance. Under these plans, if the coverage is not used for long term care, an amount is paid as life insurance to a resident’s heirs.

While new plans can be very advantageous compared to traditional “use it or lose it” policies, the cost is considerably more. No matter what coverage you may personally be considering, remember that long term care insurance is medically underwritten. The healthier and younger an individual is when applying, the more likely they are to be accepted for coverage.

Looking for additional information on long term care insurance and other assisted living topics? Use A Management Reference for Executive Directors program as a resource!

Written by Eileen P. Kutzler, Director of Financial Planning Services for Country Meadows Retirement Communities & Ecumenical Retirement Community