Long-term care insurance policies provide great flexibility in benefit design. This lets you choose the amount of protection that best suits your financial and personal needs. Here’s an overview of how a long-term care plan is designed:
Elimination Period (a deductible in days)
Inflation Protection (if chosen)
Understand LTC Insurance Policy Value
Similar to life insurance, you select a long-term care insurance policy value such as $250,000, $500,000 or a $1,000,000.
The LTCi Benefit Multiplier table below illustrates the flexibility you have with your long-term care planning. This lets you choose how much risk you want to transfer to an insurance company.
Your long-term care advisor will make suggestions and some choices will vary by company. We also list several ways to lower your LTC Insurance premiums.
LTC Insurance Benefit Multiplier ( A x B = C )
(A) Maximum Daily Benefit
(B) Benefit Period
(C) Policy Maximum Amount
Select a Maximum Daily Benefit from $50 to $500 per day.
This selection is generally based upon the cost of care in your area. We have detailed cost of long-term care information to assist you.
Select a Benefit Period.
• 2 Years (730 days) • 3 Years (1,095 days) • 4 Years (1,460 days) • 5 Years (1,825 days) • 6 Years (2,190 days)
Your Policy Maximum Benefit will equal the Maximum Daily Benefit Multiplied by the Benefit Period you select.
For Example: $100 (Maximum Daily Benefit) x 730 days (2 year Benefit Period) = $73,000 Policy Maximum
Sample Policy One: $200 Daily Benefit X 3 Years (1,095 DAYS) = $219,000 Policy Maximum Sample Policy Two: $300 Daily Benefit X 5 Years (1,825 DAYS) = $547,500 Policy Maximum Sample Policy Three: $500 Daily Benefit X 6 Years (2,190 DAYS) = $1,095,000 Policy Maximum
Long-Term Care Benefit Trigger
Your long-term care insurance benefits are typically triggered by one of the following:
Physical impairment requiring assistance with activities of daily living (ADL’s) such as: bathing, continence, dressing, eating, toileting and transferring.
Cognitive impairment such as dementia or Alzheimer’s disease. For example, an individual may be able to physically take care of their activities of daily living, but forget to turn off the stove or cannot remember where they live.
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My wife and I had a teleconference with Marcia, a Long Term Care Planning Specialist with Acacia Insurance… More Services.Marcia was very knowledgeable, personable, and entertaining during our 1.5 hour meeting. To be honest, the meeting did not seem that long at all as Marcia kept the ball rolling by going over various options for LTC.We feel like we lucked out getting her as our contact.Well done, Marcia!
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Our decision to buy long term care insurance was a smart one. My husband received home care benefits… More for over three years before he passed away. Now I've been getting home health care paid by the policy for almost two years. It has greatly reduced the burden on our family and our savings. We are so grateful for the ACACIA Insurance agent that sold us our long term care policies and assisted us with the claims process.
Let’s look at Indemnity Vs Reimbursement long term care insurance plans. There’s also a Cash Benefit plan, also described below, which is closely related to the Indemnity long-term health insurance policy. Each type has its advantages, generally based on the needs of the insured at time of claim.
Understanding Indemnity vs Reimbursement differences before you buy insurance allows you to make the best choice for your future needs.
Reimbursement LTC Policies
Reimbursement long-term health insurance policies pay for the actual daily (or monthly) cost of care. For Example, if your selected daily benefit is $100 and the actual cost of care you receive is $90, your long-term care insurance policy will pay $90. Any excess daily benefit remains for your future care needs. If your care cost is $120 daily, you will receive $100 per day and you must pay the excess amount.
A potential advantage to this type of payout is that your benefits can last for a longer period of time, if your actual cost of care is less than your daily benefit. In other words, the 3 year plan referenced above could pay benefits over 5 or more years depending on how fast you draw down the policy maximum.
Indemnity LTC Policies
Indemnity long term care insurance pays your daily benefit as soon as you qualify for benefits. You receive this amount regardless of the actual cost of care. For example, during early stages of home care a person may incur a lower cost of care due to more limited needs. Or care costs could be lower because a spouse is providing some care.
A reimbursement plan pays the actual cost of care, while the indemnity plan pays the maximum daily (or monthly) benefit. Indemnity plans even allow you to put money in the bank.
The advantage of an indemnity long term care plan is the potential to receive more money each month than you incur in expenses.
Cash Benefit Long-Term Care Insurance Policies
Cash Benefit long-term health insurance policies pay a cash benefit regardless of your actual expense. This allows you to use the payment for anything or anyone (caregiver can even be a family member), even anywhere in the world. There is little difference between an indemnity policy and a cash benefit policy when receiving care in an expensive long-term care facility.
Yet, there could be a big difference between a cash benefit and a reimbursement policy when receiving care at home. Because a cash benefit policy will pay for anyone or anything. For example, typical reimbursement and indemnity long-term care plans exclude payments for family members providing care. But a cash benefit policy would not limit you in this respect. It pays your “cash benefit” as soon as you qualify for benefits.
Note: The availability of Reimbursement, Indemnity and Cash Benefit plans will vary by state, provider and type of plan
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Our specialists offer objective guidance on a wide range of long-term care insurance products and strategies. Expect personalized service on topics such as:
✓ Choosing from a variety of long-term care insurance products
✓ Suggestions for the carrier best suited to your situation and goals