Long-term care includes a wide range of medical, social, and support services. These services are designed for elderly seniors, middle-aged, or young chronically ill or disabled people who live in nursing homes or in the community and who need continuous or occasional help over a long period in order to function.
Most public and private insurance programs either do not cover long-term care or cover only very limited services under limited conditions, and the people in need are largely unable to pay out-of-pocket for these services. High long-term care costs are a major reason that some families become impoverished and eligible for Medicaid. Many senior citizens and nonelderly ill or disabled people must exhaust their resources and “spend down” in order to become eligible for Medicaid.
It is important to remember that purely custodial care (the type of care most persons in nursing homes require) is not covered by Medicare or most Medigap policies. The only nursing home care that Medicare covers is skilled nursing care or skilled rehabilitation care. If you are looking for a nursing home to take care of your parents, you need to make sure care is provided in a Medicare-certified skilled nursing facility.
For details on coverage, America’s Health Insurance Plans (AHIP) offers an excellent online guide to long-term care insurance. They also provide a directory of long-term care insurers.
Below are some tips and considerations to think about when buying a policy.
What To Watch Out For
Along with growth in the long-term care insurance market have come concerns about the adequacy of the policies and the way they are marketed. There are reports of misrepresentation of policy coverage by agents; of insurer failure to pay valid claims; and of false or deceptive advertising and sales practices.
Questionable practices and abuses that have occurred in the past include the following:
- Possible premium increases were hidden so that buyers were surprised when they occurred. (Some contracts were worded so that it seemed they were “guaranteed not to go up.” But that may only have been for a specified period — they might not go up for three years — after which they could; and at that point, the insurer would have the right to increase premiums without limit.)
- There was little protection against inflation in costs of care in policies lacking inflation riders.
- Buyers could lose all benefits they had paid for through years of prior premiums if they missed or were late with payments.
- The requirements for medical necessity were sometimes confusingly worded or in fine print so that buyers used services and then found that they were not covered.
- Some insurers failed to let buyers examine copies of the actual policies before purchase (they simply provided advertising materials).
- Aggressive salespeople were selling policies to people who did not need them (for example, those who could have become eligible for Medicaid). Others were sold policies that simply duplicated coverage they already had.
- Most companies that sell long-term care insurance reject people with preexisting conditions. Some accept them but offer less coverage at higher costs. Sometimes a company that accepts an insured with a condition later checks in great detail on the insured’s past medical history if he or she files a claim. If the insured had omitted any relevant information or misstated something on the application, they refuse the claim and drop the policy. This practice is called post claims underwriting.
As a result of these and other problems, many in Congress have called for strict guidelines and minimum standards for long-term care policies. New policies are improving, but the quality of regulation of long-term care insurance varies greatly from state to state.