Accessing Long Term Care Insurance Benefits

Recently, we came across the following article from one of our long-term care specialists and consultants, Peter Florek.  When we purchase any type of insurance, we hope we never have to use it, but find peace of mind in knowing that it is there if needed. Yet, we often don’t think a whole lot about the particulars that actually go into using it.  Knowing a little more about the process beforehand can help ensure that claims are paid as quickly as possible and that stress is reduced in an already otherwise stressful period.  We hope you find the following information from Peter helpful in this regard.

-Mitch Marsden, CFP®, EA

Although long term care insurance (LTCI) is a relatively new insurance product, policyholders have collected billions of dollars in benefits over the years. According to the American Association for Long Term Care Insurance, LTCI companies paid more than $6.6 billion in claims in 2012 alone. In fact, one of the largest LTCI companies is currently paying more than $4 million a day in claims. This trend will surely continue as Baby Boomers move along the age spectrum. Therefore, it is important to understand the claims-paying process so that your claim will proceed as smoothly as possible in your time of need.

Step 1: Know Your Policy Benefits

It may sound simple, but many years can pass between the time you acquire your policy and when you need to file a claim, and it can be difficult to remember the details of your policy. Most policies have two ways to trigger benefits: when an individual suffers from cognitive impairment or needs assistance with at least two of six activities of daily living, which include bathing, dressing, eating, toileting, transferring and continence. However, not all policies are the same, so you need to know how your policy reads before initiating a claim. In addition, it is very possible that you will not be the one who is actually filing the claim, and a family member or advocate may be doing so on your behalf. A policy schedule page, which includes a policy number, premium and benefit information, is always included in your policy, usually towards the front. When you get the policy, it can be helpful to make a copy of the schedule page and keep it with other important paperwork or give it to a family member for future reference. Keep this information handy and review it before calling the company claims department.

Step 2: Don’t Wait to File a Claim

Most LTCI policies have an elimination period (deductible). This is the amount of time (calendar day elimination period) or days of eligible care received (service day elimination period) that are required before the claim reimbursement process will begin. Most elimination periods are between 30 and 100 days. During the elimination period, Medicare (and supplemental insurance) may or may not cover some of the care received while you are meeting the elimination period. The natural assumption might be to wait to file the claim if Medicare is covering or until you meet the elimination period. However, establishing an LTCI claim takes time, and it’s important to initiate a claim as soon as you think that you may require care.

Step 3: Expect Claim Forms

Even in today’s electronic environment, most LTCI companies still require claim forms from multiple parties to verify eligibility. There are usually three sets of claim forms: one for the policyholder or power of attorney establishing the claim, authorizing the release of medical information, etc.; one for the doctor, certifying eligibility and establishing the plan of care (nursing care, assisted living or home health care); and one for the provider of care.  Initially, these will include licensing and certification forms, and then on a month-to-month basis, you’ll receive forms related to verification of the services provided and costs incurred.

Step 4: Ask Your Company for Help

Many LTCI policies include optional care coordination/care management services. These services are usually covered over and above the policy benefits and can be utilized without having to meet the elimination period. They are intended to help the policyholder and family identify needs and resources (possibly discounted) available at the time of care. The coordinator is typically a licensed healthcare practitioner who is qualified to assess and coordinate the overall care needs of the policyholder. Of course, you can always find your own licensed healthcare practitioner to assist, but doing so would be an out-of-pocket expense.

Step 5: Make Copies and Be Patient

The processing of an LTCI claim can be tedious, and it does take time. Claim forms need to be completed and returned by various parties and claim processors cannot move forward until all outstanding paperwork is received. It’s critical to make copies of everything. Forms can be misplaced or lost in the mail, and having copies will expedite the process and ensure nothing falls through the cracks. And finally, be patient. As we all know, calling a company for service or regarding a claim usually involves waiting on the phone and reiterating the same information on several occasions. Understand and be patient during the process. In the end, legitimate claims will receive legitimate benefits.

If you have any questions with regard to filing a claim, we are always here to assist you.

Peter Florek, CLTC
MAGA, Ltd.