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Take Charge of Your Future

Do You Have the Right Insurance?

Advice to help you determine whether a long-term care policy makes sense for you.

Some insurance companies require you to use services from a certified home care agency or a licensed professional, while others allow you to hire independent or non-licensed providers or family members. Companies may place certain qualifications—such as licensure, if available in your state—or restrictions on facilities or programs used. Make sure you buy a policy that covers the types of facilities, programs, and services you’ll want and are available in the area where you live. Moving to another area might make a difference in your coverage and the types of services available.

How much will the policy pay?

Policies allow you to select the amount of coverage you want, but it's still important to understand how much coverage you'd get over how long a period. Policies may pay different amounts for different services—such as $50 a day for home care and $100 a day for nursing home care—or they may pay one rate for any service. Most policies have some type of benefit limit set in a specific number of years, a lifetime, or a total-dollar amount.

"Pooled benefits" allow you to use a total-dollar amount of benefits for different types of services. With these benefits, you can combine services that meet your particular needs.

Compare the amount of your policy's daily benefits with the average cost of care in your area. Remember that you'd have to pay the difference. As the price of care increases over time, your benefit will start to erode unless you include inflation protection in your coverage.

How do I qualify for benefits?

"Benefit triggers" are the conditions that must occur before you start receiving your benefits. Most companies consider the inability to perform certain "activities of daily living" (ADLs) to figure out when your benefits should begin.

Generally, policies begin when you need help with two or three ADLs. Bathing, eating, dressing, using the toilet, walking, and remaining continent are the most common ADLs used. Bathing should be included in the list of benefit triggers in your policy, since this is often the first task that becomes impossible to do alone.

It's important that the policy you buy uses a different trigger for paying benefits for a cognitive impairment, such as Alzheimer's disease. This is because a person may be physically able to perform activities, but is no longer doing them without help. Mental-functioning tests are commonly substituted as benefit triggers for cognitive impairments. Ask whether or not you must require someone to perform the activity for you or to stand by and supervise you in order to trigger benefits.

When will benefits begin?

Most policies include a waiting or elimination period before the insurance company begins to pay. This period is expressed in the number of days after you are certified as "eligible for benefits." You can typically choose up to 100 days. Carefully calculate how many days you can afford to pay on your own before coverage kicks in. And be aware that shorter elimination periods raise the price of the policy.

It's also important to note that some companies count the time from when you're certified and have paid for qualified care for the specified number of days. By contrast, other companies count from the date of certification and come with no paid-care requirement.

Choose a policy that requires you to satisfy your elimination period only once during the life of the policy, rather than a policy that may make you wait each time you need care.

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