Several types of policies are available, but most are indemnity policies. This means that they pay a fixed dollar amount for each day you receive specified care either in a nursing home or at home. Policyholders usually have a choice of indemnity amounts ranging from $50 to more than $300 per day for nursing home coverage. Because the per-day benefit you buy today may be inadequate to cover higher costs after a number of years, most policies now offer an inflation adjustment feature. In many policies, for example, the initial benefit amount will increase automatically each year at a specified rate (such as 5 percent) compounded over the life of the policy.

Most policies offer a choice of deductible ranging from zero to 100 days. A 20-day elimination period, for example, means that your policy will begin paying benefits on the 21st day. The longer the elimination or deductible period, the lower the premium.

You can lower your own costs for long-term care coverage, therefore, by buying a policy at an early age and by selecting carefully both the level of benefits and the deductible period. In making your selection, bear in mind that while 45 percent of nursing home stays last three months or less, more than one-third last one year or longer. It is the costly longer stay that may be the devastating financial blow that you may want to insure against.

Today, many companies also offer or policies with "pooled benefits.” This type of policy provides a total dollar amount that may be used for different types of long-term care services. There is usually a daily, weekly, or monthly dollar limit for your covered long-term care expenses. For example, you purchase a policy with $150,000 of “pooled benefits," and a $200 daily max. This type of policy would pay up to $200 per day, but no more than $150,000 in total costs. In some cases, the $200 benefit is paid even if actual charges are less, but the lifetime max still applies. The lifetime maximum can also be listed in terms of years. Some policies may have separate benefit limits for nursing home, assisted living facility, and home health care within the same policy. For example, a policy may offer five years of nursing home coverage (many policies now offer lifetime nursing home coverage) and two years of home assisted living and health care coverage.

 

Additional information about health care coverage and long-term care is available from the Area Agency on Aging. For your local office, call 1-800-677-1116. Other sources include:

The Connecticut Partnership for Long Term Care

American Health Care Association
1201 L Street, N.W.
Washington, D.C. 20005
(202) 842-4444

National Association of Insurance Commissioners
Suite 1100
120 W. 12th Street
Kansas City, MO 64105
(816) 842-3600

United Seniors Health Cooperative
Suite 500
1331 H Street, NW
Washington, D.C. 20005
(202) 479-6973