The Chestnut Blog

Like all insurance products, long term care policies can be daunting and confusing. It’s not at all a straightforward purchase: there are many variables that make up a long term care plan. When looking at a long term care plan, here are a few of the key common components:

Elimination period
Basically a time deductible. The elimination time is the period from the time you submit your claim until they begin payments. Choices may be 10,20,30,60,90,180 or 360 days depending on the  company you are applying with. We usually discuss a time period to coincide with Medicare, as they will pay a percentage of your early visits (up to 100 days in NY). By coordinating with the Medicare payment, you may be able to bring down your annual premium. It is important to note that you must have the total of your deductible in savings available in the case you need to pay the deductible.

Benefit Period
How long do you want coverage for? While statistically the average stay in a nursing facility is 15 months, each person is different and we never will know until the time (if it ever does) come. Additionally, integration with the current Medicaid laws help to dictate what the best benefit period is for you- speak with your Certified Financial Planner™ or Eldercare Advisor as to how and why this may help to conserve your estate in the unlikely event you need to put in a claim.

Daily Benefit
According to the Medicaid Institute at United Hospital Fund, the average daily cost of a New York home is $227 per day, or over $82,000 annually rising annually at approximately 6% per year. The actual cost will vary based on geography, need and type of facility. This is a good place to start when determining the base daily coverage.

Inflation rider
Most policies will give you the choice to keep your daily benefit fixed, raise by inflation, compounded or non-compounded raises, and other options to keep your daily benefit paced with inflation. It is important to remember that as costs go up every year, you must consider putting in a mechanism to consider this issue as time will devalue the use of your benefit.

Long term care insurance contains benefits, exclusions, limitations, eligibility requirements and specific terms and provisions under which the coverage may be continued in force or discontinued. Policies MAY NOT BE AVAILABLE IN YOUR STATE or variations may not apply. Costs, coverage restrictions and renewability may vary.

In addition to the above, there may be other riders, such as non-forfeiture, paid up, choices of home care coverage percentages, and a barrage of additions that vary from company to company.  Cost, too, will vary. Speak with a qualified insurance representative licensed in your state of residence to determine if this type of insurance is applicable to you, and to help design a plan that suits your needs-and before you say you’ll not need it, think about how many years you’ve been paying for your car insurance or homeowners insurance without putting in a claim…