Benefits of Long Term Care

Daily Benefit Nursing Home - This is the amount of money you contract for in order to pay the nursing home. A nursing home benefit can range from $100 to $300 per day. You buy these benefits in $10 increments. The average daily cost of a nursing home in Colorado is about $130 per day. If you wish to have a more elaborate setting, it will cost more per day.

The daily nursing home benefit is linked to the Activities of Daily Living (ADL). Under most long-term care plans, you must have trouble with or be unable to perform at least two activities of daily living. Activities of daily living are feeding yourself, bathing, dressing, toileting, transferring and continence. Therefore, if you decide to move into a nice retirement setting where all food and transportation is covered and you do not have problems with at least two activities of daily living and are not under your doctor's care, your long-term plan will not pay for it. You must have trouble with ADLs in order for long-term care benefits to be triggered.

The daily nursing home benefit under most long-term care plans will pay for a nursing home, varying percentages toward assisted living facilities, adult day care and some other services.

Home Care Benefits - Many long-term care benefits are sold as nursing home only benefits. In other words, if you are not in a nursing home, your plan does not pay. I would advise against such a limited policy.

Most individuals would prefer to stay in their home as long as possible. Therefore, it is recommended that you buy a plan that covers care in your home as well as in a full-time care facility. Many plans offer a home care benefit that is a percentage of the daily nursing home benefit. For example, if the daily nursing home benefit is $120, you could buy home care at 50%, which would pay $60 per day, or 75% which would pay $90 per day for home care assistance.

The home health care benefit will pay for adult day care, assistance with eating, bathing, and cleaning. Some plans allow the consumer to purchase a home care benefit that will pay a non-professional to do home care. For example, a benefit like this would allow for the payment to friends or family members who assist you at home. Having the 100% total healthcare component will cost more, however.

Nonforfeiture of Benefits - This benefit should be included as part of your plan. What this means is that if you have a policy, and let the policy lapse after a number of years, the insurer will still pay a limited benefit to you for a limited number of years. In essence, instead of having no benefits at all, you get a limited benefit at a reduced amount.

Elimination Periods - Most LTC plans offer a benefit after a waiting period, or elimination period, is met. If you purchase a plan with a 90-day elimination period, you must wait until day 91 before a benefit is paid. Therefore, be careful not to pick a waiting period that is so long that you will experience a hardship while waiting for benefits to kick in. The longer the elimination period, the lower the cost of insurance. In other words, a plan that requires a 180-day wait will be less expensive than a plan that has a 90-day wait.

Benefit Period - This is the amount of time for which you can collect a daily benefit Many plans have a 2-year, 5 year, and an unlimited benefit. If you buy a two year benefit, and you contract for $130 a day benefit, the insurer will pay you $94,900 over a two year period and then the insurance will cease. If you buy a five-year benefit, the insurer would pay $237,250 for a five year span. If you have an unlimited benefit, there is no limit to the amount the insurer will pay.

Guaranteed Renewable Policy - What this means is the insurer will not increase your rates after the policy is in force, or because you use the policy. Remember that most policies do have a provision that allows them to increase your rates if they also increase the rates of all the other insureds in the state as well.

Inflation Rider - The inflation rider in a long-term care plan is a benefit that indexes your daily benefit to the Consumer Price Index. If you have this rider as part of your policy, your benefit will automatically increase as the cost of care increases. For example, if you purchase a plan with a $120 a day benefit, and 20 years later you become nursing home confined and the cost at that time is $220 per day, your plan would only pay $120 per day without the inflation rider.

If you purchase a plan with an inflation rider, your benefits would automatically increase at a rate of either 3% or 5% per year at either a simple or compound rate of growth. If you purchase a compound inflation rider, it will cost more than a simple inflation rider, but provide a stronger inflation index.

Inflation riders have a definite impact on the cost of a policy. However, I would not purchase a policy without this protection since your use of this benefit hinges so strongly on the passage of time.

Waiver of Premium - Once you start to collect benefits, your insurer will no longer require you to pay premiums for the insurance. This is called a waiver of premium and it stays in force as long as you are collecting benefits under your plan.

Optional Payment Provisions

Restoration Benefits

There are a few other benefits that most plans include, such as bed reservation and respite care, but most of the salient benefits have been summarized above.

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