By: Revanche

Kicking myself: Long term care insurance

October 25, 2008

After procrastinating for hours, I finally tackled another load of organizing today. While sorting through piles of folders, manila and accordian, I found some leftovers from a three year old benefits enrollment packet. Among the papers was an envelope containing information on long term care insurance. It was clearly set aside for perusal at a later time because I’ve been very concerned about long term plans for my parents since starting this blog, but had never been satisfied enough with my research on this topic to satisfy my need for information before purchasing it.

Alas, how clear is hindsight. I should have signed up for this years ago! Had I done so, at least one part of our dilemma would be less frustrating. Unless my mom is declared functionally disabled, she cannot draw any governmental benefits, and my dad cannot afford to leave her alone to go work a job with regular hours because we don’t have anyone to stay with her. Catch 22: they have very little income of their own, and now that we’re in this fix, my dad can’t go out, leaving mom alone, to earn a decent wage.

From my review of the materials, assuming the new insurance company that my employer contracted with last year honored the same basic requirements, mom would be eligible to claim benefits now, thus freeing my dad to work a more regular job and support at least the two of them.

For future reference, a typical set of triggers for benefits eligibility, according to the California Department of Aging, would be based on the inability to perform at least 2 of the 7 activities of daily living (ADL) listed below, or on impairment of cognitive ability:

  • Bathing
  • Dressing
  • Continence
  • Toileting
  • Tranferring
  • Eating
  • Ambulating

She’s definitely suffering from impairment of cognitive ability, and at least 2 of the above 7 ADLs. I did have some sense of urgency when I was in my first year of employment, but it fell by the wayside because money was still too tight. Now that it’s too late to help mom, I need to take a long hard look at the application for my dad because if anything happens to him, too …….

In the state of California, consumers are protected by the following regulations (also from the California Department of Aging):

1. Guaranteed Renewable or Noncancelable Protection: Every long term care policy sold to an individual must be either guaranteed renewable or non-cancelable. Guaranteed Renewable means that the company cannot cancel your policy or change any of the benefits, unless you fail to pay the premiums. Insurance companies are allowed to increase premiums for a “class” of policies, but not for you individually. Non-cancelable means that your coverage cannot be canceled or the benefits changed, and the premium cannot increase as long as you continue to pay on time.

2. Continuation or Conversion Coverage: If you purchase a long-term care certificate through a group, you can continue or convert your coverage if the group cancels the master policy or terminates coverage. Continuation means you keep the same coverage if you pay the premium on time. Conversion means you get an individual policy of insurance with identical or equivalent coverage without health screening. In each case, your premium can change when you are no longer in the group.

In other words, if your group leaves the company, you’re still ok. If you leave the group, the company is not bound to continue offering you the same policy.

3. 30-day Free Look: Every applicant (except purchasers in employer or trade groups) has the right to return any policy or certificate within 30 days of receipt, for any reason, and have all premiums or fees refunded. The 30 days begins on the day you get the policy or certificate.

4. Forbidden Requirements: Policies sold after 1990 cannot require you to be in a hospital before benefits will be paid in a nursing home, or to get skilled nursing care before personal care services are covered. Companies can’t refuse to pay you benefits because you weren’t in a hospital or nursing home before you needed covered home or community services. Companies also cannot refuse to pay covered benefits to people who are diagnosed with a mental illness or cognitive impairment, including Alzheimer’s disease, if they meet the eligibility trigger in the policy.

Duties of Agents and Companies: California law requires agents to comply with certain standards when selling insurance and to give consumers certain information at the time they make a sales presentation. If you are replacing a policy, agents are required to give you a fair and accurate comparison of any policies you may already have with one you are considering for purchase.
If you are buying any long-term care insurance, you must be given a “Long-term Care Insurance Personal Worksheet.” This form gives you important information about any rate increases the company has had, and asks you to consider certain other issues related to buying long-term care insurance and your ability to pay premiums over time. If you do not complete this form, the company is required to contact you before issuing coverage to make sure the agent showed it to you, and that you meet their standards for income and assets to purchase this product. The Personal Worksheet is intended to help you purchase the right type of policy and an appropriate amount of coverage for your particular circumstances. Insurance agents have a duty of honesty, good faith, and fair dealing to all consumers. They are prohibited from using high pressure tactics to sell you insurance and are not allowed to sell inappropriate coverage or excessive amounts of insurance. Advertisements and other marketing materials used by agents and by companies cannot be misleading. Violations of these standards should be reported to the California Department of Insurance at 1-800-927-HELP (4357).

I do wonder, though, how these protections change if the person paying the premiums move, or even if the beneficiary of the insurance moves out of state. Do you retain the protections of the state in which you purchased/initiated the coverage?

5 Responses to “Kicking myself: Long term care insurance”

  1. Can you cover your dad with your benefits package? If so, that’s a pretty generous benefit package . . .

  2. Anonymous says:

    Great information, but just looking at the Outline of Coverage for any long-term care insurance policy can make anyone want to “stick their head in the sand.” Procrastination and denial are what make people shy away from educating themselves.
    The easiest way is to consult with a Long-Term Care Specialist, an independent agent with additional education and training ins Long-term care financing and planning. It will save you hours and hours of struggling with sorting out all of the content.
    Dane Petchul, LTCP, CLTC
    http://www.LongTermCareInsurancePros.com

  3. Revanche says:

    calgirlfinance: The unusual thing about LTC is that they have allowed, in the past, the benefits/coverage to apply to parents, grandparents, domestic partners, and children, not just the employee. I’ll have to check and make sure the same applies to the new company because my employer recently changed vendors.

    Dane: Thanks for the suggestion but I’m a firm believer in self education before consulting professionals with whom I’m unfamiliar. I find it saves both time and effort on both sides.

  4. K says:

    Thanks for this article. I think that insurance is one of those topics that people usually shy away from. It can get confusing, so it’s good to have as much info as you can.

  5. Revanche says:

    K: Glad you liked it. When I review the paperwork in depth, I’ll do another post.

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