Policy wording is rather standardized in many areas, even though there are many differences in the ultimate benefits. The more “common” provisions are discussed, with some actual wording from LTCI policies. While the words will vary by company, they will still be so similar that understanding a provision in one particular policy will allow for understanding and interpretation of other LTCI policies.
NOTE: Many of these provisions have been discussed earlier in this text, but they are mentioned again so as to show their importance and relation to the other provisions.
The Cover Page of an LTCI policy states the Company Name and the Company Address, followed by the Insured's name and Address. Usually the Cover Page contained certain required explanations to policyholders. Many agents simply glance at this page to see if it is their insured(s), but care must be taken at time of delivery to verify all of this information. Too frequently, it is taken for granted that everything is correct, but later, at the most inopportune time, it is discovered that the name or address, or benefits specified on the cover page, are not correct, causing problems that would not have occurred if the policy had been reviewed properly.
Nearly all policies are "Renewable for Life" (Guaranteed Renewable) by law. This is normally stated as such and is followed by a statement stating that the policyholder has the right, subject to the terms of the policy, to continue their policy as long as they pay their premiums on time.
The company cannot change the premiums because of age or bad health by law. Premiums may be changed only if the insurer changes the premiums for all similar policies on the same policy form and issued in the same state. A company writing LTCI in several states must obtain each state’s approval before raising the premiums in that state. Usually the company can change premiums only on the anniversary date of the policy and by giving the insured 31 days notice.
A 30‑day period for the insured to return the policy is mandatory in nearly all jurisdictions. It should be pointed out to the insured, that he must return the policy in order to take advantage of the 30 day provision. Premiums will be returned in full. The policy can be returned either to the home office of the insurer or returned to the Agent. When returned to the Agent, the agent is responsible for providing a receipt so stating that the policy was indeed presented to the Agent. Of course, the policy will then be voided from the date of issue.
Policies will contain a statement to the applicant informing them of the importance of the complete and correct completion of the application, and the penalties if the application questions are not answered fully or correctly. Since the application becomes part of the policy, it should be impressed upon all applicants that if the information is not correct to the best of their knowledge, it could be discovered just when they need the benefits, defeating the whole purpose of the policy.
This provision frequently is quoted in some news articles as the insurance company making the applicants “cross their ‘T’s and dotting their ‘i’s” and is used by insurance companies as an excuse to keep from paying the claim. Note the wording stating that the insurance company has the right to deny benefits, but it does not state that they definitely will. In truth, if an applicant gives all of the answers to the best of their ability, there is not an insurance department in the country that would allow an insurance company to deny a claim if the applicant was honest and gave the best available information at the time.
The importance of complete and accurate answers has been discussed earlier, but it should again be pointed out that a copy of the application will become part of the policy. The company certainly has the right to rescind and void ab initio (from the beginning, the same effect as if the policy had never been issued).
The role of the Medicare Supplement policy in long term care has been discussed earlier. However, just to make sure that the insured fully understands and does not get an LTCI policy confused with a Medicare Supplement policy (aka “Medigap” policy) this is restated as a provision and part of the policy. Does that mean that no one will ever think that an LTCI policy is a Medicare Policy? Nope, but it helps. In the early years of LTCI, the agents that most usually sold these policies also sold Medicare Supplemental policies and they used their customer list as leads –– adding to the confusion in the minds of some seniors.
The Schedule of Benefits of most policies usually is on the Cover Page of the insurance policy, but there are so many options that the practice is now to have a separate Schedule Page which summarizes the Coverages of the policy. This allows the insured to see exactly what is covered without having to read all of the “technical” wording in the policy. This should always be reviewed with the insured, and is usually required when the policy is delivered.
F LTCI policies should always be delivered by the agent if at all possible. Very few of the insureds will have any actual experience or knowledge of these types of policies and with many benefit variations, it is very important for the agent to deliver the policy and explain it in detail with the insured at that time.
The Elimination Period, the Daily Maximum Benefit, the Benefit Period and the Lifetime Maximum Benefit should be indicated here. The Lifetime Maximum Benefit may or may not be listed separately on a policy that does not use the "pool” approach. The coverages will be summarized below as the benefits are more specifically addressed in the policy:
The following Definitions contain words and definitions used in a typical LTCI policy. Where significant differences arise between policies of various companies, they will be so noted,
An Activity of Daily Living (ADL) provision is quite standard in the industry. These are determining factors for an insured to receive benefits under this policy. They may differ somewhat between policies, as some companies make provision for assistance in taking medication, but this is unusual. ADL’s have been discussed earlier, in some detail.
As discussed in this text, some companies may also add “Activities that require Substantial Assistance”, and so describe these activities. Some company’s may either add, or modify, an ADL in respect to the ability to take medication unsupervised.
The typical policy has the following six Activities of Daily Living, which are defined as activities that the insured performs in his everyday life:
Most policies, and in some jurisdictions, all LTCI policies, contain an Adult Day Care provision. This is another provision that resulted from policyholder requests and is very popular with benefit beneficiaries. These facilities are available in most communities of any size and have been discussed earlier as an “alternate care.”
Adult Day Care is medical or personal care on a basis less than 24 hours a day, provided in a facility licensed to provide care for persons needing personal care services, or in daily needs, such as Activities in Daily Living.
Most policies contain some benefits available in Assisted Care Facilities. There has been, and probably always will be, confusion as to what is an ACF (or ACLF in some situations), or a rest home or retirement home, or Nursing Home. (See definition of Nursing Home below). A typical definition of an Assisted Care Facility states that it must be licensed by the appropriate agency to primarily engage in providing care and services to a specified number (commonly ten) resident inpatients in one location, on a 24‑hour basis. It must be able to provide care and services needed as a result of inability to perform Activities of Daily Living, or from Cognitive Impairment. Also, it must provide 3 meals a day and accommodate special dietary needs. They are required to have a Doctor or Nurse available in case of emergency and it must be able to provide assistance in managing medications.
Note: If an institution such as a Congregate Care Facility or Life Care Facility has multiple licenses, one of which is that of a Nursing Home, only the portion or section of that institution that is specifically licensed for Nursing Home care and meets all of the requirements of the license, and those requirements as shown above, will qualify as a Assisted Care Facility under most policies.
This was discussed in detail earlier as the number of days that the policyholder must qualify for payment under the benefits listed in the policy, or for a list of specific benefits, before the policy benefits will start. Note the reference to a "Plan of Care" as many of these policies have a "Care Coordinator Benefit" defined later in the policy. Details of the Elimination Period application will appear later in this text.
There is an introduction of a new “player,” the “Care Coordinator” or “Care Manager” or similar title. This function will be explained in considerable detail later in the text. Suffice it to say at this point, that not all policies provide for a Care Coordinator, and in those cases where they do appear, note that the Elimination Period is waived. This is very important to prospective applicants, as there is a considerable premium savings if the Care Coordinator is used. In respect to the Elimination Period, if a Care Coordinator is elected at the time of the claim, then the Elimination Period is waived.
In many cases the Care Coordinator provision as it appears in some policies of this type, eliminates the need for an Elimination Period. Therefore, what would an enterprising Agent suggest? Correct – take the longest Elimination Period offered and anytime that a claim is presented, immediately use the services of the Care Coordinator. This will save premium money and therefore freeing up funds for a longer Benefit Period and/or Daily Benefit.
It should also be noted that there is no Elimination Period for Respite Care. Also, the Elimination Period must be satisfied only by expenses for which payment would be made if there were no Elimination Period, or benefits may be duplicated from other sources. The number of days shown in the Schedule do not need to be consecutive, but must have occurred within a continuous period equal to some multiple (usually 3) times the number of days in the Elimination Period. Once the Elimination Period has been satisfied, usually a new Elimination Period will have to be satisfied only if there is a period of more than 180 consecutive days during which there are no expenses covered by that policy.
A Family Member must be defined as some plans allow a family member to be a caregiver, while other plans specifically do not allow a Family Member to take care of a member of their family. Some plans will pay a fixed amount for the family member to be trained as a caregiver. Generally a family member is defined as a spouse, and anyone who is related to the insured or his spouse, adopted children, in‑laws, or step‑relatives. Parents, Grandparents, Children, Grandchildren, Brother, Sister, Aunt, Uncle, Cousin (first), Nephew or Niece.
A definition of Home Health Care Services Providers must be defined. In most cases, a qualified employee of a home health care agency may be used. Some companies allow independent aides but specify the training. A typical definition of health care aide services would be assistance by an aide from a health care agency or personal care attendant employee of a home health care agency, that provides health care tasks, personal hygiene, assists in activities of daily living, managing medications and other related services.
A Homemaker is provided when it is necessary that another person performs basic living activities. A Homemaker is generally defined as someone who provides services necessary for the insured to manage and maintain a household when they are no longer capable of managing those activities and a caregiver is not available. This may include preparing meals, laundry and other incidental household tasks.
Hospice care is quite standard in these policies and is typically defined as outpatient services, not drugs or medical supplies, that are designed to provide palliative care or alleviate physical, emotional and spiritual discomforts of the insured because he has been diagnosed as being in the last phases of life due to a terminal disease of 6 months or less. This also provides support provided by their family and caregiver.
The Care Coordinator (also known by similar names, such as Care Manager, Privileged Care Coordinator, etc.) is a health care professional whose professional and training includes experience or expertise in managing and arranging for long term care service. The health care professional can be a Doctor, Nurse, Social Worker or other similarly trained person. Where required, he or she must be licensed and acting within the scope of that license.
These duties are those performed on a daily basis in the usual household. They may be called "Homemaker Assistance," "Chore Services," or similar titles. The policy usually provides for assistance from a person that performs light housekeeping duties but which the insured is unable to perform because of his need for assistance. Examples of services to be performed are simple household repairs, routine cleaning, and such duties that do not require the assistance of a trained caregiver.
Cognitive Impairment is the deterioration or the loss of mental capacity, as opposed to disability because of physical reasons. Alzheimer's Disease and dementia are types of cognitive impairments. This has been discussed in detail in respect to underwriting. The policy will specifically define this condition as most people do not understand the concept. The policy will define it as basically the deterioration or loss of mental ability which results in the need for continual supervision for the protection of the insured and for the protection of others. The insured/applicant may be required to perform certain tests that can determine lack of ability in short or long term memory and ability to recognize himself or others, determine his ability to determine where he is and the present time, date and year. They may also be required to submit to tests to determine his ability to reason and to arrive at certain conclusions.
This is the maximum amount that may be paid for all expenses incurred during one day any covered benefits, as shown on the Schedule Page, including but not limited to, is the maximum amount that the insurer will pay for all expenses the insured would incur during any one day, from the Nursing Home Daily Benefit, Assisted Care Facility Benefit, Bed Reservation Benefit, and the Home Care Benefit. If the Care Coordinator Benefit is used, the maximum would be seven times the daily amount. The Maximum Daily Benefit will increase in accordance to the Inflation Protection, if so elected
For the purposes of this type of policy, the definition of "Doctor" (or "Physician") differs somewhat from that found in other types of health insurance policies. For the purposes of the LCTI policy, the term "Doctor” or "Physician” is a legally qualified and licensed professional qualified to practice medicine, and is operating within the scope of that license. A "Doctor” or "Physician” does not include the insured, a family member or anyone who lives with the insured in their residence. Also the Doctor or Physician cannot have any type of ownership or interest in any facility where the insured stays, or any other organization, company or entity that provides care under that policy.
The "Care Coordinator" or similar service as noted above are very similar among companies offering this benefit. Some policies use the services of a Care Coordinator Agency, and the policyholder will be provided with a list of the accepted agencies. Others will have their own Care Coordinators, or contract for services with a particular agency; therefore the insured will be provided with an 800 number on their identification card. Some policies may define the Plan of Care in great detail but for purposes of this discussion, a detailed explanation is more of an internal matter than a standard policy provision. Sometimes the insured must pay for the services, which may be kept by the company from the benefits, or the insured may be billed directly. Usually though, the fee is paid by the insurer, or it is of a small amount.
Most policies with a Care Coordinator clause will generally waive the Elimination Period if the Care Coordinator is used. This is a very substantial and important benefit as discussed earlier.
The method of using the Care Coordinator, when it is offered by the policy is outlined in detail in the policy and usually these services include, but are not limited to, the following.
This provision has caused considerable concern among agents and policyholders, as to definition and purpose. It would appear to the average layperson that if they purchased $150 Daily Benefits, and the Nursing Home charged $150 a day, but the average Nursing Home daily charge in that area was only $100 a day, the policy should nevertheless pay the $150 a day. The purpose of this provision was because of the overcharging of ill and elderly patients by Nursing Homes and other benefit providers. Some policies have recently dropped any reference to Usual and Customary, or similar terminology, and are depending upon their Care Coordinators to handle any problems in this area that may arrive. In those rare situations where the policy uses this terminology, Usual and Customary charges are defined as the charges normally made for similar care, service or other items provided to persons with comparable medical conditions or impairments in the immediate geographical location.
A Respite Care provision is very typical in today's LTCI policies and is one of those provisions dictated by concerns of policyholders. Many times when an insured is receiving Home Health Care benefits, and the primary caregiver needs time off, the insured can be transferred to a Nursing Home or other facility until the caregiver returns. It is defined as short‑term care provided to the insured at home, in a community based program, or institution, the purpose of which is to relieve the primary caregiver that is providing services in the home of the insured.
As with the term "Doctor", it is necessary to define what a Nurse is and does. A Nurse is a Registered Nurse (RN); a Licensed Practical Nurse (LPN); or Licensed Vocational Nurse (LVN) and is operating within the scope of their profession and license.
The definition of a "Nursing Home” can vary in common parlance, so a more explicit definition is necessary. Policies generally have a detailed definition, usually defined as an institution that is licensed to primarily provide nursing care to inpatients. It must provide 24 hour daily nursing service and whose services are documented and developed and reviewed by at least one Doctor and one Nurse. A Doctor as defined in this policy must be available at all times in case of emergency, and there is at the least one full‑time Nurse on duty at all times. Clinical records must be maintained on all patients and documented policies and procedures must be followed in the handling and administration of drugs and biologicals. Note: If an institution such as a hospital or Adult Care Facility has multiple licenses, one of which is that of a Nursing Home, only the portion or section of that institution that is specifically licensed for Nursing Home care and meets all of the requirements of the license, and those requirements as shown above, will qualify as a Nursing Home under this policy.
In the principal retirement areas of the country, such as Florida, Arizona and California, Retirement Homes are big business. As the number of Retirement Centers grew, and entire communities became Retirement Centers, in order for a Retirement Home to be properly licensed, they found that they had to exclude certain classes of elderly individuals. Many of the excluded customers were wealthy and good “customers“ because they could not live independently without medical attention, ranging from occasional visit from a home health care aide, or a homemaker service, to situations requiring confinement to a Nursing Home.
Initially, most of them would assist their residents in finding a good and proper facility that could treat their condition. Soon it became apparent that they were watching big money leave their custody, so in recent years, the most popular situation is where an individual can go from a retirement center, to assisted living, to a Nursing Home and never leave the premises (and the money stays at home). These combined facilities springing up all over caused State and Local licensing problems. However, now these facilities have multiple licenses. In most cases, a resident who suffers an illness requiring help, must move to another part of the facility a soon as they require services that could not ordinarily be performed in a person’s home.
The HIPAA Act also contained a provision that stated that if certain conditions of a LTC Insurance policy were met, the insured would not be taxed on any benefits received under a LTC Insurance policy. Even though no recipient of LTC Insurance benefits has ever been taxed as far as can be determined, the threat of such an eventuality has caused most policies to become "Qualified".
This Qualification applies to provisions basically in the number of Activities of Daily Living (ADL) required for benefits, plus the elimination of the Physician's recommendation as a "trigger" to start benefits. Many companies offer both Qualified and Non‑qualified policies at this time. The industry has pretty much taken the position that to tax the benefits of a person so ill that they are in a Nursing Home would be political suicide if the occasion ever arose, but to be on the safe side, they offer both plans. Also, in case of illness or injury, the insured may be eligible for benefits, such as being in a Nursing Home recovering from a serious accident.
The provisions discussed here pertain to basically a qualified plan, with notations of differences.
The policy benefits require only two ADL's to qualify for benefits. Other policies, especially non‑qualified, may require 3. Older non‑qualified policies have an additional requirement, that of referral by a Doctor. Some older policies may require 2 out of 3 "triggers" to qualify. Some of the original policies had "gate‑keepers" which were usually Medical Directors of the Insurance Company, which would give the final authority before benefits can be paid.
Typically, to be eligible for the benefits of the policy, the insured must provide to the insurance company, proof as needed, either by certification of assessment from a Doctor, which demonstrates that the insured either cannot perform at least two activities of daily living alone or with normal mechanical aides normally available. This inability may require another person to assist the insured, to organize the activity, or to perform the activity for the insured, ‑ OR –the insured is totally dependent upon another person for continual supervision because of Cognitive Impairment.
The insured will also be eligible for Nursing Home Benefits when necessary because of injury or sickness and the insured’s Doctor has submitted necessary certification or assessment to us.
The Insurer will pay benefits after becoming eligible, after the insured’s Elimination Period has been satisfied and while the policy is still inforce. All benefit payments are subject to other provisions of the policy, such as the maximum Daily Benefit &/or Lifetime Payment.
Nursing home benefits are paid while the insured is confined in the Nursing Home as an inpatient, and while the policy is in force.
ACF benefits are normally a percentage of the Maximum Daily Benefit, as described earlier; such benefits are used to pay for expenses incurred by the insured while an inpatient.
This is another benefit offered because of the customer demand. Once a person is in a Nursing Home for a period of time, it becomes their "home." For many elderly persons, it is traumatic if they have to leave the Nursing Home temporarily and then return to another bed. This benefit allows a person to return to their own bed after a specified period of time.
If the insured is hospitalized during a Nursing Home or Assisted Facility stay, and there is a charge for the insured to reserve their bed for a later return, the policy will pay these charges up to a maximum of 21 days of hospitalization during a policy year.
As stated in earlier discussions, on older policies Home Health Care was available as a Rider and this benefit became an optional part of a Nursing Home Policy (hence, Long Term Care) The benefit was either a flat amount, or a percentage of the Maximum Daily Benefit (such as 50% or 80%). With the development of the more popular Home Health Care policy, the benefit is a specified daily amount.
Now it is popular to treat the Home Health Care benefit as part of the Plan of Care which is required by the company. It is understandable that a formal plan would be necessary, as there are many opportunities for overpayment and even fraudulent charges in home health care.
A typical benefit provides seven times the Maximum Daily Benefit during any week. The reason for this is that Home Health Care services can fluctuate during the week, such as services of a Physical Therapist providing services3 days a week in addition to the routine services provided by a caregiver. If benefits are $ 100 a day, the insured would have $700 to pay for home health care during the week, regardless of what each day's services may cost.
Some policies provide payment of 100% of expenses and some pay 80%. This is not at all uniform among LTCI policies, but it indicates how a popular plan works. Actually, in reviewing several popular plans, 100% of the benefits seem popular, although there are some at 80% and some at 70%.
Typically, under this type of policy, if the insured receives care and services according to a Plan of Care defined in this policy, the following amounts will be paid that are so indicated and consistent with the Plan of Care:
1. 100% of expenses for health care services provided by a Nurse, licensed physical, occupational, respiratory, or speech therapist. 100% of the expenses for Adult Day Care and Hospice Care would also be paid. Twenty‑one (21) days annually of Respite Care will also be paid 100%
2. 80 % of expenses for Home Health Aide, Personal Care Attendant, Homemaker and Household services. Expenses may be more than the Maximum Daily Benefit; however, not more than seven (7) times the Maximum Daily Benefit would be paid for all covered expenses under this provision during any calendar week.
Another recent benefit available but not offered by all plans, is the Caregiving Training feature. Typically, the policy will pay for training of a person to become a Caregiver. Many policies allow for training for family members. The payment for training is typically “five times” the Maximum Daily Benefit.
The policy will pay for caregiver training when the caregiver is going to take care of the insured in his home. They will not pay for training for someone that will be paid to take care of the insured. If the insured is in a hospital, nursing home, or assisted care facility, they will not pay for this training unless it is reasonably expected that the training will enable the insured to return home where they can be cared for by the person who receives the training. This training does not affect the Elimination Period and cannot be used to satisfy the Elimination Period. The maximum that the insurer will usually pay five times your Maximum Daily Benefit.
CASE STUDY
An actual series of incidents happened approximately 7 years ago in South Florida relating to the training of Caregivers.
Because of the activity of a particular agent in the area, several members of a local Bridge Club who were well-to-do widows residing in an upscale condominium complex were insured with LTCI or Home Health Care policies. At that time, most LTCI and Home Health Care policies required caregivers to be employees of a Licensed and approved Home Health Care Agency; however this particular company did not require that. The Caregiver could be anyone with training, as is typical in today’s policies.
The ladies of the Bridge Club, most of whom had maids, came up with a plan to get the insurance company to pay for their maid service. One lady volunteered (or lost the draw – the exact reason is still not known why she went first) to test the system. The lady (we will call Bertha) sent her maid (we will call Maria) to the local Community College in the evenings for training as Home Health Care Aide. This was about a 4 week course at night, but Bertha paid the tuition, which was inconsequential.
When Maria became licensed, Bertha then went to her family doctor who had taken care of her for over 20 years, and complained that because she was getting so old, she just could no longer prepare her meals, and she couldn’t even dress herself or get in or out of bed without Maria’s help. (Continued)
The doctor did not dispute her word, as it was very common for people of her age to have such complications. The alternative was to subject her to a barrage of tests, which neither party wanted. Therefore he agreed to certify her needs so that she could start receiving benefits from her LTC Insurance policy. The insurer agreed, and Maria was mostly paid for by Bertha’s insurance.
Of course, when the other members of the Bridge Club heard about this, they immediately started doing the same thing.
But since most of them were insured with the same company, it didn’t take long for a sharp-eyed claims supervisor at the insurance company to spot the similarities and start an investigation. The ladies of the Bridge Club soon found that their little adventure caused them to lose their LTCI policies. True story.
This benefit will pay for equipment rented or purchased which is used in the home which helps keep the insured at home for a longer period, sometimes specifically stated as 90 days, etc. Typically, the policy will put a maximum lifetime amount on this equipment, typically 50 times the Maximum Daily Benefit, i.e. if the Daily Benefit is $100, the maximum benefit would be $5,000. This benefit does not affect the Maximum Daily Benefit on any day. Some policies require that the equipment be part of a formal Plan of Care.
The policy will pay for the purchase or rental of equipment intended to assist the insured in living at home or other residential housing that would otherwise require some direct physical assistance. This equipment must he reasonably be expected to enable the insured to remain at home for at least 90 days after the equipment has been acquired and it must be part of the formal Plan of Care. Equipment covered are items such as, but not limited to, pumps and devices for intravenous injection, ramps to allow the insured to move from one level of the residence to another level, support bars in the toiler and bath or shower, and other mechanical aids. It does not cover any equipment that is installed for the purpose of increasing the value of the residence, or any artificial limbs, teeth or equipment.
These items are not subject to the Elimination Period, or used to satisfy this period. The lifetime maximum payment under this provision is typically 50 times the Maximum Daily Benefit, and any payments for this equipment will not count against their Maximum Daily Benefit for any day.
Most companies now provide a Spousal discount on premiums, i.e. if the husband and wife both apply for identical policies simultaneously. The discount can range from 10% to 70% for two individuals living in the same household. One policy allows the applicant to choose either the non-cost paid-up survivor benefit (see below) or a 10% discount. Another company offers a 15% discount if one partner applies, 30% if two partners applies. Many are 30%, which is interesting as 3 years ago, 10% was usual. In addition some policies provide for a survivorship benefit that waives any premium after the death of one spouse and the policy has been in force for a period of time, usually 10 years.
Many policies state, in essence, the company will not require the payment of further premiums under the policy after both of the following events have occurred: the 10th anniversary date of the policy; and the death of the insured’s continuously covered spouse.
With the increasing number of treatments for various diseases and illnesses and the evolution of patient care, either through technology or by legislative or Insurance Departmental fiat, most policies make a provision for changes in treatment to be covered under the provisions of their policies, sort of a "catch‑all" provision. Some companies specify it as a supplement to or revision of a Plan of Care. For these purposes, it is referred to as a "Supplemental Benefit.
The policy will pay for any Supplemental Benefits that are adopted as a supplement or extension of a Plan of Care. The request for Supplemental Benefits must be agreeable to the insured and his Doctor, and be shown as a cost effective alternative to benefits outlined in the policy, and agreed to by the insured. Benefits covered under the Supplemental plan will not be paid for until the agreed‑upon date. The Supplemental Plan may include using providers, facilities, or supports that otherwise are not covered by the policy, and may include in‑home safety devices, home‑delivered meals, etc.
Many of the Exclusions and Limitations are the same as those under other Health insurance policies, however are not as lengthy as most other policies. The following example is rather standard wording. Note that the exclusion of narcotics and drugs unless administration has been approved by a Doctor would probably cover the growing legalization of marijuana for medical treatment in certain situations where the policyholder is in severe pain.
The policy wording would be similar to the following:
This policy will not pay for any benefits, whether equipment, services, care, treatment, or other expense which are:
Since there are some Nursing Home (Skilled Nursing Care) benefits available under Medicare &/or Medicare Supplemental policies, it is quite possible for an insured to receive benefits from both a LTC Insurance policy and from Medicare and Medicare Supplement policies. This provision limits the LTCI policies benefits in these situations.
HIPAA also addresses this situation to prevent the duplication for tax-qualified plans. Medicare is always primary so LTCI benefits are excess of the amounts paid by Medicare or any other state or federal health care plan except for Medicaid. This follows through, as any benefits of the policy that would otherwise be payable at 80% will continue to be paid at 80% of the reduced amount.
An LTCI policy is a “contract” of insurance, as are all insurance policies. Therefore there are certain provisions that apply to the contractual arrangement. The Contract Provisions are the same as most other health insurance policies, with the exception that under some policies and in some jurisdictions, the insurance company may void a policy for a material misrepresentation within 6 months and deny all claims for this period of time. From 6 months to 2 years of the policy in force, the insurer may rescind the policy or deny benefits if the misrepresentation are both material and pertinent to the conditions for which benefits are sought. After 2 years, the policy cannot be rescinded because of misrepresentation alone, and can only be contested if the insured knowingly and intentionally misrepresented relevant factors relating to his health on his application.
LTCI policies provide information on premium payments, effective dates, and termination. Most are identical to other Health Insurance policies, except for the Waiver of Premium which is different from most other health policies:
The insurance company will waive the premiums on the policy and any attached Riders, if the insured is confined to a Nursing Home or Assisted Care facility for a period of more than 90 days. This waiver applies to premiums falling due thereafter, on the policy and any Riders. This waiver will continue as long as consecutive days of nursing care benefits are being paid to the insured.
This benefit is unique to the Lifetime Payment Maximum, or “Pool of Money” policy, as under this policy benefits will continue until the “Pool” has been spent. Under other types of policies, they terminate when the benefit period expires.
Termination of the LTCI policy will not affect any claim for uninterrupted institutional confinement that begins while the policy is in force and continues beyond the date of termination. Uninterrupted care includes being transferred from one Nursing Home or Assisted Care Facility to another, receiving another level of care in the same facility, and /or transferring back to a Nursing Home or Assisted Care Facility from a temporary hospitalization. The extension of time will terminate when the Lifetime Payment Maximum that remains on the date of termination, is reached, and is subject to the Elimination Period and all other provisions of the policy.
Primarily because this policy provides coverage mostly to the elderly who often have assistance in such matters as paying bills or making claims under insurance policies, the policy allows the insured to require the insurer to notify someone else if the Grace Period has expired and the policy is in danger of being terminated because premium payments have not been made in time. The insurer will then give that person additional time to make the premium payments on the behalf of the insured. This designated person is either shown on the application for this policy, or the insurer receives notification of change of person so designated.
Again, since the LTCI policy is primarily a product for the elderly, a continuation of coverage if offered. Basically, if the insured suffers from Alzheimer's disease or other forms of Cognitive or Functional Impairments, and his policy lapses before his benefits have been exhausted, the insured will be provided with a continuation of coverage. However, in order for the coverage to continue, the insured must provide the insurer with proof that during the period between the time the policy terminated and up to the present time. The insured has either been incapacitated to the point that they cannot perform at least 2 Activities of Daily Living without assistance and they cannot perform these duties by themselves, or the insured is cognitively impaired to the point that he is dependent upon someone else for continual supervision because of cognitive impairment.
Proof of the insured’s condition must be certified by a Doctor, or other proof requested by the insurers, and provided to the insurer within 5 months of the termination date. When the insured is eligible for continuation because of being functionally incapacitated, and within 9 months of the termination date, when the insured is eligible for continuation because he has been cognitively impaired, the insured must pay all past‑due premiums for the policy and all Riders that were in force immediately prior to the date of lapse. When that happens, the coverage will be continued as if the policy had not been terminated.
STUDY QUESTIONS
1. If an insurer wants to raise premiums on the LTCI policies it has in force,
A. it may change premiums only because of age or bad health.
B. premiums may be changed only if the insurer changes the premiums for all similar policies on the same policy form and issued in the same state.
C. it must pick one date and then automatically all policies will have their premiums raised on that date.
D. there is no way that premiums can be changed on in-force policies.
2. It is mandatory in all states that
A. the policy wording must be identical on all LTCI policies by all insurers.
B. only flat commissions are paid.
C. there is a 30-day period for the insured to return the policy if they wish.
D. that there be an inflation benefit of 5% per year compounded.
3. To further demonstrate to the insureds the importance of their answering questions correctly and completely on the application, and to help avoid confusion at time of claim,
A. a “Notice of Compliance” is provided each insurer which attests to the truthfulness and accuracy of the completed application.
B. a copy of the original application is attached to the policy and becomes part of the policy.
C. the insured is provided with a copy of the company directory.
D. a copy of the application is filed with the Insurance Department.
4. When the insurer has completed the issuance of the policy,
A. it is recommended that the agent deliver the policy.
B. the agent should never deliver the policy because that gives the insured another chance to decide not to accept the policy and it has to be “sold” again.
C. it must be mailed by registered mail, delivery receipt required.
D. in most states, it is first mailed to the Department of Insurance for its review, and then it is mailed to the insured.
5. If an insured wants to know what benefits the policy provides, they can obtain a brief and concise description
A. on the definitions page.
B. on sales material in the possession of every LTCI agent.
C. from their Department of Insurance.
D. the Schedule of Benefits page.
6. In many LTCI policies in respect to determining the Elimination Period,
A. the policy will suggest the period according to a published income table.
B. if a Care Coordinator (Manager, etc.) is involved, some policies will then waive the Elimination Period.
C. is that some policies automatically assign an Elimination Period based upon the length of the benefit period.
D. is that Elimination Periods are outlawed in most states.
7. Some LTCI plans allow a family member to be a caregiver, therefore
A. the policy has a schedule of salary that must be paid to all caregivers.
B. the policy will have a definition of “family member.”
C. these plans should be avoided as that would be a way for a family member to get control of the insured’s assets in case of disability, to the detriment of other family members.
D. the family member must be a Registered or Practical nurse, or Physical Therapist.
8. A policy definition states that “it” is an institution that provides 24-hour daily nursing service and whose services are documented and developed & reviewed by a Doctor and at least one nurse. “It” refers to
A. a Continuing Care Community.
B. an Adult Day Care Center.
C. a nursing home.
D. an Assisted living Facility.
9. After a person has become accustomed to being in “their” bed in a nursing home, it may be traumatic if after they go to a hospital for treatment and return to the nursing home, they may have to be assigned to another bed or room. To help with this, many LTCI policies have
A. a written guarantee that they will come back to a “like” bed with “comparable” facilities.
B. a guarantee that they will pay for a “better” nursing home by increasing the amount of daily benefit automatically when the leave the hospital.
C. a Bed Reservation Benefit which allows a person to return to their “own bed” after a specified period of time.
D. a waiver of premium if they are not returned to the same nursing home.
10. Some policies allow for training of family members, however
A. the caregiver must have had some health professional training.
B. the family member cannot be a spouse or parent.
C. the caregiver must take care of the insured in his home.
D. the caregiver must be paid to take care of the insured.
ANSWERS TO STUDY QUESTIONS
1B 2C 3B 4A 5D 6B 7B 8C 9C 10C