Q: What are the differences in the levels of care and coverage with long-term care insurance?
Answer:
The phrase "long-term care" refers to a broad range of medical and personal services. Long-term care goes beyond standard hospitalization and nursing care, and includes all the assistance you could need if you are unable to care for yourself for an extended period of time. For purposes of long-term care insurance (LTCI), there are three levels of long-term care. It is important to understand the distinctions between these levels in order to ensure that the policy you buy includes the coverage you want.
Skilled care
Skilled care is continuous "around-the-clock" care required to treat a medical condition. It is ordered by a doctor and is usually delivered by a skilled medical worker (e.g., a registered nurse or professional therapist). A treatment plan is established and supervised by a doctor.
Intermediate care
Intermediate care is needed on an occasional basis (daily or a few times a week), but is not continuous. Trained medical workers under the supervision of a doctor provide it. Intermediate care is less specialized than skilled care.
Custodial care
Ninety percent of all long-term care is custodial care, which provides assistance with activities of daily living (such as bathing, eating, and dressing). It does not require a doctor's orders, and can be performed by someone without professional medical skills. For example, someone who needs reminders to take medication on schedule may need custodial care.
Most LTCI policies cover skilled, intermediate, and custodial care in licensed nursing homes. However, long-term care can be provided in a number of other places, including adult day care centers, assisted living facilities, hospices, and even your own home. LTCI policies may limit the additional facilities in which you can choose to receive care.
Benefit choices
When you purchase a LTCI policy, you will have to choose the amount of coverage you want. Most policies provide a maximum dollar amount for each day of nursing home care. This is called a daily (or "per diem") benefit. Daily benefits are typically available in amounts ranging from $40 to $250 or more. Home care and other types of care may be covered at a lesser rate (typically 50 to 80 percent of the daily benefit amount). Some newer LTCI policies offer "pooled benefits" rather than per diem benefits, meaning that the policy provides a total dollar amount that may be used for different types of long-term care services.
You will probably also need to choose a benefit period, which is the maximum length of time that benefits will be provided (e.g., one year, three years, five years, etc.). After the applicable time limit has been reached, no further benefits are paid. Lifetime benefits are also available, but as you would probably expect, LTCI premiums are higher for policies with longer benefit periods. Some policies have different benefit periods for different types of care.
