Comparing LTC Policies

All individual policies covering long term care services in New York State must be guaranteed renewable. Guaranteed renewable means that you have the right to continue the policy as long as the premiums are paid on a timely basis. An insurer cannot terminate the policy if your health declines. The insurer also cannot make any change in any provision of the policy while the insurance is in force without your agreement. However, an insurer can change the premium. An insurer cannot change the premium charged for the policy unless it receives the approval of the Department and it applies to all members of a class covered by the policy.

All policies covering long term care services place certain limits on benefits and may exclude certain benefits completely. In choosing a policy that will best meet your own personal needs, it is important to understand the limitations and benefit exclusions which are contained in these policies. The most common exclusions and limits that are used in insurance policies covering long term care services are described below:

Maximum Policy Benefit: The maximum policy benefit is the period of time or dollar amount limit for which long term care benefits will be paid under the policy. Insurance policies covering long term care services contain maximums of from one to ten years, lifetime benefits, or a dollar amount limit. Most of the maximum policy benefits with dollar amount limits are calculated by multiplying the number of years of benefits chosen, times 365 days, times the daily benefit amount chosen. Once the benefit limit or time limit is reached under these policies, no other benefits will be paid for your continuous need for long term care services. It is important to note that in some long term care policies the maximum policy benefit is not the same for all benefits listed in the policy. For example, some nursing home and home care policies have separate maximum benefits for nursing home and home care. Certain policies also contain a separate benefit limit for each particular period of care (generally successive days of care in a nursing home or while receiving home care without a break in the care for a period of time specified in the policy).

Elimination or Waiting Period: The elimination or waiting period is the number of days you must receive long term care services before benefits will be paid under the policy. During the elimination or waiting period you will have to privately pay for the care you receive. A new elimination or waiting period may be imposed for each period of care. Shorter periods increase the cost of coverage. Different policies count elimination periods differently, so please review the policy language carefully. Some policies may require you receive formal long term care services each day in order for the day to count towards the elimination period.

Preexisting Condition Limitation: A preexisting condition is a condition for which medical advice was given or treatment was recommended by, or received from, a licensed health care provider within six months before the effective date of coverage of the insured person. Some of the policies covering long term care services contain a preexisting condition limitation. This limitation is the period of time after you buy the policy that benefits will NOT be payable for care related to the preexisting condition. Some policies apply preexisting condition limitations only for medical conditions that are not disclosed on the application. Therefore, it is very important that you answer all questions on the application as completely as possible. Policies covering long term care services may not contain a preexisting condition limitation of more than six months after the effective date of coverage.

Policy Exclusions: Specific exclusions are listed in all long term care policies. Some of the more common exclusions in policies covering long term care services are:

  • Mental illness, however, the policy may NOT exclude or limit benefits for Alzheimer's Disease, senile dementia, or demonstrable organic brain disease.
  • Intentionally self-inflicted injuries.
  • Alcoholism and drug addiction.
  • Care in government nursing facilities unless a charge is made in which you are obligated to pay.
  • Coverage while the insured is outside the United States and its possessions.

Daily Benefit Amount: Most of the policies covering long term care services currently being sold do not cover the full charge for a nursing facility or home health agency. Each indemnity policy limits payment to a daily benefit amount, which is the dollar amount payable per day based on the type of care being provided. Any charges above the daily benefit amount must be paid by you. Many indemnity policies cover provider charges up to the daily benefit amount.