Insurance11 Flashcards
Long-Term Care
Assistance with living
■ Not medical treatment
■ Usually not covered by Medicare
■ Skilled care in nursing home
–– Requires prior 3-day hospital stay
–– Medicare pays 100% for first 20 days
–– Beneficiary has a daily co-pay days 21–100
–– No Medicare coverage after 100 days
Long-term care insurance
Bought from an insurance company
–– Insured chooses type and amounts of coverage
–– Protects assets upon death
Long-Term Care Benefit Triggers
Insured unable to perform activities of daily living
–– Eating
–– Dressing
–– Toileting
–– Continence—bladder and bowel control
–– Bathing—in a tub, shower, or by sponge bath
–– Transferring—getting out of bed and into a chair or moving about the house
Insured has cognitive impairment
– Ability to perceive, reason, or remember
–– Safety concerns
Types of Long-Term Care
Facility based care
–– Skilled nursing care—performed only by licensed nurses under a doctor’s orders.
–– Intermediate care—intermittent care performed by licensed nurses nursing under a
doctor’s orders.
–– Custodial care—help in performing ADLs, informal caregiver.
■ Home health care—skilled medical and therapy services performed in the insured’s home.
■ Adult day care—company, supervision, along with social and recreational support for the
insured during the day.
■ Respite care—professionals care for someone temporarily to give a few days rest to the family
member or friend who usually provides the care.
■ Assisted living facilities—for insureds who need assistance from time to time, but can live more
independently than people who need custodial care.
Long-Term Care Policy Provisions
Benefit amount—how much
–– Indemnity-Stated dollar amount per day
–– Reimbursement-Actual expense or stated dollar amount per day, whichever is less
–– Home care—if covered usually 50% of facility amount
–– Policy may have a lifetime maximum
–– Higher the benefit—higher the premium
■ Benefit period—how long
–– Minimum 12 months
–– Usually 2 to 5 years
–– May choose lifetime
–– Subject to lifetime maximum amount
–– Longer the benefit period—higher the premium
■ Elimination period
–– Insured qualifies for benefits
–– Benefits not paid until end of period
–– Time deductible
–– Longer the elimination period—lower the premium
■ Optional benefits
–– Guaranteed insurability
■ Allows insured to raise daily benefit
■ Uses attained age
■ No medical questions
■ Not currently receiving benefits
–– Nonforfeiture
■ Cash value or return of percentage of premiums
■ Minus claims paid
■ Policy has been surrendered or has lapsed for nonpayment of premiums
–– Inflation protection
■ Yearly increase in benefit coverage by a stated percentage
–– Simple
–– Compound
Exclusions
– War or acts of war
–– Alcohol or drug abuse
–– Self-inflicted injuries
–– Treatment provided without cost to the insured
–– Mental illness and nervous disorders without a demonstrable organic cause
■ Dementia or Alzheimer’s is covered
Qualified Long-Term Care Insurance
Receives favorable tax treatment
–– Benefits are paid tax free
–– Premiums may be deducted
■ Requirements to be a qualified policy
–– Benefit triggers: inability to perform at least two ADLs for at least 90 days or cognitive
impairment requiring substantial supervision, certified by a physician
–– Guaranteed renewability
–– Coverage of only long-term care expenses
–– No benefits for expenses reimbursable under Medicare
–– No cash surrender value
–– Any dividends or refunds of premiums must be used to offset future premiums or increase
benefits
–– Conforms to specified consumer protection marketing and benefit standards
State Long-Term Care Partnership Programs
Joint effort
–– Insurance companies
–– State insurance department
–– State’s Medicaid agency
■ Benefits
–– Dollar-for-dollar asset protection
Long-Term Care Insurance Regulations
Marketing
–– Provide applicants with a shopper’s guide and outline of coverage
–– Consider whether the purchase is suitable for the applicant’s needs, objectives, and
circumstances
–– Determine whether the sale will involve replacement
■ Notice Regarding Replacement
–– 30-day free-look period
–– Advertising is not misleading
–– Describe the policy’s renewal conditions on its first page
■ Standards
–– The policy must be at least guaranteed renewable
–– A sale must include an offer of inflation protection
–– A pre-existing condition may not be defined more restrictively than a condition for which
medical advice or treatment was sought within six months before the policy’s effective date
–– Long-term care policies cannot condition payment of benefit on a prior hospital stay
■ Group long-term care insurance policies must give insureds the opportunity to continue
benefits if membership in the group ceases or to convert to individual coverage if
coverage terminates
■ Insureds must be protected against unintentional lapse by giving the insurer the name
of another individual to whom a premium due notice will be sent if the policy enters
its grace period
