BUYING LONG-TERM CARE INSURANCE REQUIRES CAREFUL REVIEW

Silver Tips is written by the Senior Citizens’ Law Office in Albuquerque.

BUYING LONG-TERM CARE INSURANCE REQUIRES CAREFUL REVIEW

Long-term care insurance pays for specified amounts of nursing home, in-home and assisted living care. Unlike Medicare supplemental (“Medigap”) insurance, for example, payment is not dependent on the services first having been covered by Medicare or other insurance. The insurance policy states what types of services are covered, and under what circumstances.

First, it is very important to assess whether purchasing such coverage is a good idea for you at all. The main reasons people buy long-term care insurance are to protect significant assets from depletion by long-term care costs and to minimize future out-of-pocket costs for themselves and family members. You should consider what other alternatives, such as Medicaid coverage, may be available to you. You should also consider whether you will be able to comfortably pay the cost of policy premiums (and possible increases) in the future.

Unlike Medigap insurance policies, which provide standardized amounts of coverage, long-term care coverage varies considerably from policy to policy. So if you decide you’d like long-term care coverage, carefully review each policy you are considering. Some of the important conditions to focus on are: the health status or events that trigger coverage; the waiting (also known as “elimination”) period, if any, before benefits start; the maximum amounts of benefits that can be paid; the locations where services can be covered; whether benefits are paid whenever care is received (a/k/a “indemnity” coverage) or whether only your actual expenses are covered; whether your accumulated premium payments are protected in any way; and whether there are any other significant limits on coverage.

Another important policy term to consider is whether the benefits payable under the policy will increase over time. A policy bought in 1985 that pays $75 a day for nursing home care may have provided good coverage back then. Today, that amount is insufficient to cover the costs of nursing home care. Most policies allow you to purchase “inflation protection,” which increases payment amounts annually, but it significantly increases premium costs.

You can seek out the help of a professional when deciding whether long-term care insurance is for you and when interpreting diverse policies. Insurance professionals can help you better understand the terminology connected to insurance coverage, explain financial impacts and help you decide whether buying long-term care insurance makes sense.

Whether or not you consult with a professional, make sure you understand exactly what coverage you’re getting and at what cost before you buy a policy. You are never required to buy such insurance. In addition, if you buy long-term care insurance, be sure to keep your policy papers in a safe place, where you know you will be able to examine them from time to time.

For more information about long-term care insurance, contact the New Mexico Aging and Long-Term Services Department’s Health Insurance and Benefits Assistance Corps (HIBAC), statewide toll-free at 800-432-2080.