What to Look for in a Long Term Care PolicyBefore you sign on the dotted line for your long term care policy, you should take the time to do some research. You first need to understand the basics and know what to look for in a long term care policy. This will help to separate the long term care insurance policies that are second rate and not for you from those that satisfy your long term care needs.
What Should a Long Term Care Policy CoverLong term care policies differ in many ways. Depending upon your situation, you will need certain types of long term care, which means you will need certain types of long term care insurance coverage. Here are the most common basic needs that long term care plan covers.
Waiting Period Before Your Long Term Care Policy Kicks InMost long term care policies have a waiting period before the policy begins paying out for your expenses. This waiting period can be anywhere from 15 days to 90 days; however, there are policies with longer waiting periods. You will have to pay for any expenses incurred for long term care during the waiting period, which makes this a significant decision when deciding on the long term care policy for you. The waiting period is not simply based upon calendar days but on what are called reimbursable service days, which may not be straight forward. If you don't understand this exactly, make sure to ask. Also, under many long term care policies there are different waiting periods for different services. For example, you may have a 30 day waiting period for home health care, but a 90 day waiting period for nursing home care. The goal is to balance the waiting period with the premiums you will have to pay. A lower premium will generally mean a longer waiting period and vice versa.
Benefit Period of Your Long Term Care PolicyThe benefit period of your long term care policy is another major consideration when searching for the best long term care insurance policy. A study from the America Association of Long-Term Care Insurance states that only eight percent of those needing long term care coverage require it for more than three years. You should consider your family history in this situation before making your decision. If you have a history of chronic illness in your family, then a longer benefit period may be needed. There also could be considerations if you are buying your insurance through Medicaid and their long term planning strategy, in which there will be requirements for a longer benefit period.
Know Your Daily Benefit Offered By Your Long Term Care PolicyThe daily benefit offered by your long term care policy is very important when choosing the right policy for you. If the daily benefit offered is less than your daily expenses, then you will have to pay the difference. You will have to do some research to determine the average daily expenses for long term care in your area and then make your decision accordingly. You also need to know how the daily benefit is calculated. Some long term care insurance policies calculate the daily benefit as what you use each individual day. For example, if you require $200 worth of care in one day and your daily benefit calls for only $150, then you must pay the difference. Other long term care policies average out the daily benefit over an entire month. This can be beneficial if you need home health care, because their may be days in which you need only half a day of care and some days where you may need additional care. If averaged out for an entire month, you would be less likely to pay overages.
Activities of Daily Living and Your Long Term Care PolicyActivities of daily living (ADL's) include the following:
ADL's are important because they are the triggers of your long term care policy. Different policies are structured to kick in based upon the different numbers of these activities that you can no longer perform. A good long term care policy will kick in when two of these activities can no longer be performed on your own. Of course, a long term care policy will have a lower premium if it takes more ADL's to force the policy into paying out.
Other Items to Consider When Choosing a Long Term Care PolicyThere are a couple of other items that should be mentioned when it comes to understanding what to look for in a long term care policy. First of all, you will want to go with the most comprehensive policy possible that fits within your budget. The more comprehensive the policy, the more flexibility you will have as far as covering what you need. You should also check into what is called inflation protection. Long term health care costs are continually rising and at a surprising rate. Because of this, you need additional protection to cover your long term health care costs as inflation increases your possible expenses. If your long term health care coverage gives you a daily benefit of $200 and inflation over time increases your health care expenses to more $200, inflation protection will help to cover the rise in health care costs. Normal inflation protection increases your daily benefit by five percent per year. Inflation protection will mean higher premiums, but it could save you money in the long run on your long term health care costs. |
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