Two Kinds of Long-Term Care Policies? Yes, Cash Model and Indemnity

While most people know that there are two basic forms of life insurance (term and whole life), they do not realize that long-term care insurance also has two basic forms, ie cash model and indemnity model.

It is hard enough to sort through the variables of setting up a long-term care plan. You have to select a coverage period, how much a month you think you might need for a nursing home, whether to include home health, whether to include an inflation protection rider.

First, the Cash Model: Once the policy-holder qualifies to become claim eligible, the insurer will mail out a check each month for the full amount of the monthly benefit. This money is his or hers to spend as they see fit to cover their bills. The cash model does not require the use of licensed care for the insured to be covered. The insured has complete freedom of choice of providers to tend to their needs. He can even buy a lift-equipped van if that what is needed to maintain independence.

These cash payments are tax-free up to $98,550 in 2008. It is an ideal plan for the insured, because he will know exactly how much money is coming in each month, and gives such complete freedom of choice in how one can spend it. Any excess funds can be stashed away in savings or investments for such time as the LTC policy coverage period expires. And if the insured does pass away, those funds will be in their accounts to cover any debts and be passed along to their estate's beneficiaries.

The second type is the Indemnity Model, which is what most of us have been exposed to. This model requires that in order for benefits to be paid, they must be performed by a licensed caregiver AND for eligible expenses. The insured typically has to receive at least one hour of licensed care per day to remain covered by the policy.

The insured under this plan has a daily amount allotted to him; at the end of the month, the insurer totals up the days in which the insured received at least one hour of care, multiplies by the daily coverage amount, and then issues the check to the insured.

Now think about this. This means that the insured could potentially receive wild variations in the level of benefits under this format. True, they are tied to actual services received. But the insured may have a real need for some type of adaptive equipment in the home so that they can remain in their own homes. This equipment is normally going to have a monthly bill no matter whether the insured has a lot of home visits or not – and MAY NOT be covered under your policy. That means the insured is paying out of his own pocket for whatever is needed to maintain independence.

The indemnity policy is generally 40-60 percent less expensive than the cash model, and I hope you readers can see why. People are scared of the cost of a LTC plan as it is, so insurers just show this model to their prospective clients. Your agent may not even be trained in the cash model plan because so few people know enough to ask for it.

You are wiser to save money by cutting down the coverage period rather than by going to the indemnity plan. Industry studies show that most long-term care plans have a claim history of only 2 to 3 years. And yet many clients select the lifetime option because they are terrified of outliving their money. This is one case where fear is costing people thousands of dollars in premiums unnecessarily.

I should also add that in case you do not qualify for coverage under a long term plan (in other words, you are rejected by their underwriting department), you still have other options. Many life insurance policies now have an accelerated benefits provision, where you can draw upon the value of your life insurance plan to pay your nursing home or other end-of-life expenses.

I hope this information is of benefit to you in planning your insurance coverages.

[Disclaimer: This article is not intended to sell the reader anything. But you must still consult with a financial planner (preferably certified) or your local insurance representatives to find a policy that fits your needs.]

What features should you look for in a Long-Term Care insurance policy?

You have finally decided to bite the bullet and check around for a long-term care policy for yourself or a loved one. But where do you begin? What features should be included in a plan?

You do not have to re-invent the wheel when seeking a LTC policy. The folks at the National Association of Insurance Commissioners (NAIC, found online at NAIC.org) have kindly provided a mini checklist for your benefit. The list includes:

• 
  At least one year of nursing home or custodial care, and should also include intermediate care.
  You probably want home health care included, too. Home health should not be limited to skilled care (meaning a registered nurse). You will probably need to call in unskilled help to assist with household chores, to help bathe and feed your loved one, or any of the myriad things that need to be done.
• 
  Coverage for Alzheimer's disease, if the policyholder develops the illness after the policy is issued.
• 
  Inflation protection option. No one knows just how expensive it will be ten years from now to keep someone in a decent nursing home; prices have risen sharply over the past ten years for all health care. It will cost you more to have this rider or option.
  The insurance carrier is obligated to provide you with a free copy of the “long-term care insurance shopper's guide”. They prefer to hand this out after you have signed on the dotted line for an application, but you are NOT obligated to buy or express an interest in buying, in order to get this booklet.
• 
  A guarantee that the policy cannot be canceled, nonrenewed, or otherwise terminated because you get older or develop a chronic illness/serious disease.
• 
  You have the right to a 30-day period – known as a 'free look' – in which to examine the policy and return it if it does not seem to be what you wanted. The insurer will return your check. This is a standard provision, not a gift from each insurer, but do mention it anyway.
• 
  There should not be any requirement such as the following: that the policyholder first be hospitalized before admission to a nursing home in order to be covered; that the policyholder first receive skilled nursing home care before entering an intermediate or custodial nursing home; or that the policyholder first receive nursing home care before receiving benefits for home health care. Why are these important? Because most people prefer to keep a loved one at home for as long as possible before finally transferring him or her into a nursing home. These provisions we have listed all are intended to keep someone in a healthcare facility of some kind rather than at home.
• 
  In addition, you might see a 'waiver of premium' rider. This allows you to stop paying premiums during the time you are receiving benefits. Read closely to find what restrictions there are on this rider. Commonly, you will have to be in a nursing home for 90 days before the waiver goes into effect.
• 
  Pre-existing conditions. Insurers usually say in the policy that pre-existing conditions are excluded for 6 months or a year. However, often they will simply not write a policy for someone with certain diagnoses. For example, I once tried to get a long-term care policy for a lady who was 72, in great shape – but underwriting turned her down because she had diabetes. Even though her condition was controlled and her weight was in the normal range, they felt her disease was progressing enough so that they did not want the risk. Also, some diseases may be quite common in your state and some insurers will not cover it. In Minnesota, multiple sclerosis is quite common (statistically speaking) and so it is excluded from dread disease policies. (In other words, if you have a family history of this disease, move to another state if you want to buy a dread disease policy.)
• 
  What exclusions are in the policy? It is common that injuries or illnesses that result from self-inflicted causes are excluded. But you may be surprised that those who have a history of drug or alcohol abuse will also be excluded from coverage if their condition is deemed related to that history. (Example: liver disease, brain damage from a drug overdose, etc.)
• 
  Possible return of premium. Some policies allow you to get a healthy refund of premiums paid if you do not use the insurance provisions or decide to cancel. You will not get 100 percent of your premiums back. You will however pay more for this rider. Why would you want this rider? If at some point you can no longer afford the premiums, or some other option opens up for you that will replace the coverages of this policy, you could decide to cash it in, so to speak, and use the cash to buy into another coverage.

People generally buy far too much long-term care insurance. From the statistics that I have seen, most people only spend one, two, or three years in a nursing home. And yet people are terrified of the possible expenses of spending twenty years in such a facility.

Although I personally know of a classmate's father, an Alzheimer's patient, spending six years in a nice facility, he was not the norm. He was a big, strong guy before he came down with the disease, and he died as result of complications of pneumonia.

On the other hand, my own grandmother only spent about six months in a skilled care facility before she died. But you have to play the odds here, the reasonable odds. And most likely, three years of nursing home care is all that one can reasonably be expected to afford premiums for.

My other recommendation, as a past professional in the area of senior products, is that IF you cannot get a long-term care policy due to health history or whatever, then increase your life insurance coverage to the most you can reasonably afford. Most life insurance policies are 1) cheaper than LTC policies, 2) easier to get than a LTC policy, and 3) have acceleration of benefit provisions so that if you are diagnosed with a terminal illness or have to go into a nursing home, you can draw upon the policy limits. At the very least, you can put up the life insurance policy as a form of collateral on the final bill from the nursing home.

SEE ALSO:
America's Health Insurance Plans (AHIP) – online at AHIP.org; they have an office in Washington, DC.
American Health Care Assn. -- 1201 I (as in Illinois) Street NW, Washington, DC 20005, 202-842-4444, or online at ahca.org.
National Assn. Of Insurance Commissioners (NAIC) – 2301 McGee Street, Suite 800, Kansas City, MO 64108, 816-842-3600, or online at NAIC.org.
National Council on the Aging – 300 D Street SW, Suite 801, Washington, DC 20024, 202-479-1200, or online at NCOA.org.
Area Agency on Aging – 1-800-677-1116 to find a local office.

Take a Load Off Your Mind With Advance Directives for Medical Care

Have you still not done anything about formalizing an Advance Directive for your medical care? Thousands of people rushed to do it when the Terry Schiavo case mesmerized the nation. But now some years have passed, and we need another reminder to get it done.

This article is prompted by a very nice column by a former LPN, who goes by the name Kyana Belle in her column, urging people to create an Advance Directive for their care. She had brief stories to tell of the nightmarish, ugly situations that could have been averted with some well-thought-out planning ahead.

I might add that hospital staff is obligated to make available to you whatever forms are needed to create this Advance Directive. It need not cost you a thing unless you need to consult an attorney if you have multiple marriages, multiple families from those marriages, or no current spouse.

Kyana explains what a Do Not Resuscitate order really means, and explains the difference between that and a Living Will, plus she provides links for all you need. She has just three basic points to make:

1) A "Do Not Resuscitate," "DNR,"or "No Code" is ONLY an order that prevents attempts to restart your breathing and/or heart beat should either cease.

2) If you have not legally appointed someone to make decisions for you when you are unable to do so yourself, someone will be appointed for you according to your state laws.

3) It can NOT wait - get it done now!

Thank you Kyana! You rock! Readers may find the entire article here at: http://kyanabelle.newsvine.com/_news/2008/11/06/2080706-how-to-protect-your-rights-with-advance-directives?email=html&threadId=412008&commentId=4007241#c4007241 .

In Honor of the Upcoming Veterans Day – How To Make Claims on Your Military Life Insurance

In honor of Veterans Day this year, I want to help the families of military veterans get their proper benefit checks for life insurance policies held by service persons. IF you have kept up your military group life insurance policy during service (if still in uniform) or after discharge, you (or rather your beneficiaries) should be able to get the VA to accept your claim. Just read this article and go to the link given below to find the claim form.

Several years ago a scandal broke out about the Veterans Administration denying all phone inquiries inre making claims on veterans group life insurance policies. It seemed that the staff was using the funds to pay for department parties and other nonsense.

I was also surprised to hear of one widow of a WWII veteran making a successful claim on her late husband's policy not long before this scandal broke out (about ten years ago). Fortunately for her, she had an adult child who sent in a request for a claim form instead of just accepting the erroneous information that had been received by phone. The veteran had kept policy status updates on file, and so they had a policy number and an address to send the request to.

So to make a long story short, they received the claim form – a mere half-page long – and filled in the necessary information. The only difficult section asked for the veteran's discharge date, an item they luckily had on the discharge papers.

Do you want to guess how much money the widow wound up with? The policy had been paid up some time before and was accruing interest. The final valuation was for over $6200. That was a very welcome hunk of change to help make up for the loss of her husband's pension check from work.

Below is the link to the VA insurance page. There are several forms available but to make a claim, click on the one that says: SGLV 8283, Claim for Death Benefits. There is also a related form to make claims for the death of a spouse (or other covered family member) of a military service person.
http://www.insurance.va.gov/sgliSite/forms/forms.htm

It does not matter how long ago your military service person or veteran died; the policy still accrues value until the claim is made. Just dig up your insurance policy and discharge papers, and you will have enough information to fill out the claim form.

Good luck to all of you, and thank you to all our United States veterans out there (and their families). Have a good day.

[The erroneous information given by phone was possibly a mixup; the VA continually has to deny inquiries about a mythical veterans insurance dividend payout. You can read a full article explaining that confusing urban myth at http://urbanlegends.about.com/library/weekly/aa050698.htm .]

Wall Street Journal Has Story on Fighting Insurance Denials

Pushing Back When Insurers Deny Coverage for Treatment --
By Anna Wilde Mathews, The Wall Street Journal
http://www.marketwatch.com/News/Story/Story.aspx?guid=b6e08398424d449bb8ac46fc3c8a2565&siteid=nwtpf&sguid=LlOmLCZmMkSOlLZa0_8Pmw
Battling a health insurer when it refuses to cover certain treatments can be aggravating and time-consuming. But if you choose to join the growing number of people who are appealing coverage denials, there are several strategies that can bolster your case.

State, insurers, doctors in battle over billing

-- from the Ventura County Star, Sept. 12, 2008
A person injured in a car crash is treated in the emergency room. The insurance company pays the out-of-network doctors involved in the care less than they think they're owed.
So a doctor or the hospital sends a bill for the remainder directly to the patient।

It's called "balance billing" and has spawned a turf battle among state officials who are trying to outlaw the practice, insurers who support the ban and doctors who fight it and see themselves as victims।

"Legislate, regulate and litigate। We'll do whatever it takes," said California Medical Association President Richard Frankenstein, before a meeting with Ventura County doctors this week. He laid responsibility for balance billing on insurers trying to protect their profits by underpaying doctors.

"It's a very clever ploy of multimillion-dollar companies to avoid their responsibilities," he said.
But some patient advocates say there's enough blame to share। They say the fight over compensation for emergency care ends up wounding patients who worry that if they don't pay the doctor's bill, their account will end up with a collection agency.

"We're caught between these two institutional providers," said Beth Capell, an advocate with Health Access California. "It's a temptation to say a plague on both your houses."
Many of the problems occur in emergency rooms where neither patients nor doctors control who they see। People may be treated by providers who don't contract with their insurance company. The doctors are paid a lesser, out-of-network rate.

According to the California Association of Health Plans, 1।76 million Californians who went to emergency rooms over a two-year period were billed by doctors or hospitals for money not paid by insurers.

The total bill was about $528 million.
The California Department of Managed Health Care plans to roll out a regulation next month that labels balance billing for emergency care as an unfair practice, opening the door to enforcement action against doctors or hospitals।

A bill by Sen। Don Perata, D-Oakland, would ban ER doctors from balance billing and would set up a process to mediate insurance disputes as well as an interim rate of payment. The bill was approved by the Legislature two weeks ago and awaits Gov. Arnold Schwarzenegger's signature. It would supersede the managed care regulation.

The doctors' association will sue the day after the state implements its new rules, said Frankenstein, in Camarillo for a meeting of the Ventura County Medical Association. The state group also opposes Perata's bill, though a group of emergency physicians supports the measure.
Frankenstein said insurance companies need to expand their networks to include more emergency room and on-call doctors। They also need to pay more, he said.

"It's up to the health plan to either serve up the doctor or pay the bill," Frankenstein said, suggesting insurers maximize profit by saying, "This is what we feel like paying today."
Nicole Kasabian Evans of the California Association of Health Plans fired back।

"Health plans are not the ones that are sending the bill to the consumer," she said। "We don't think it's appropriate strategy to hold patients hostage."

Evans said the insurance group supports a ban on balance billing and an independent process to deal with disputes with doctors। But the group opposes Perata's bill because the rate of payment may be too high. Doctors who currently contract with insurance companies might drop out to get the out-of-network rate, she said.

Eliminating balance billing is great if it comes with reform that transforms the healthcare system and provides insurance coverage to everyone, said Jim Lott, executive vice president of the Hospital Association of Southern California। But hospitals aren't happy about measures that eliminate the bills but not the underlying causes, he said.

"Balance billing is a tool hospitals use to force health plans into negotiating fair rates," he said. "Consumers need to know. If their health plan is screwing up, they need to know that."
Patients shouldn't be seen as a tool, said Cindy Ehnes, director of the state Department of Managed Health Care।

"It's inappropriate to put a vulnerable, potential sick patient in the middle of a billing dispute just to provide leverage," said Ehnes, calling on doctors to take their disputes to her department.
Local doctors say balance billing isn't about getting rich but about staying in business। Some predict that eliminating the mechanism will amplify other healthcare problems such as getting doctors to serve on call.

"I think that will be the death knell to taking call in the emergency room," said Dr। Mark Ghilarducci of Oxnard.

Jerry Flanagan of the Consumer Watchdog group in Santa Monica feels sympathy for doctors who can't break what he called the stranglehold of insurance। But he also blames the medical association for holding up years of efforts to end balance billing.

"As sympathetic as we are for the physician, we think there is no excuse for billing the patient because of disputes between the doctor and the insurance company," he said। Referring to strategies that would solve the problem, he said: "That's what we've been waiting five years for."

Ventura County Star, Sept. 12, 2008, http://www.venturacountystar.com/news/2008/sep/12/state-insurers-doctors-in-battle-over-balance/

Just try to find a primary care doc when on Medicare

[Read an interesting, developing discussion of the article here at http://minnieapolis.newsvine.com/_news/2008/09/13/1863658-where-have-all-the-doctors-gone-just-try-to-find-a-primary-care-doc-when-on-medicare?last=1221363391#last_1 ]

He needed a neurologist. But nobody would see him unless we had a primary care doctor, and we couldn’t find one, Donna says. We pounded the phones day after day, going through the whole list [of primary care doctors] in Salem. But everyone who accepted new patients would not accept people on Medicare. The Brys’ experience is not an isolated case. At least 56 million Americans, almost one in five of the population, are now medically disenfranchised —having inadequate access to primary care physicians because of shortages in their area—according to Access Denied, a county-by-county study by the National Assn. of Community Health Centers and the Robert Graham Center.---
[read whole article at http://bulletin.aarp.org/yourhealth/caregiving/articles/where_have_all_the_doctors_gone_.html?NLC-WBLTR-CTRL&DET=F2-91208 ]