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What is Long Term Care Insurance ?
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Long-term care insurance offers financial support in paying for necessary long-term care services rendered in a variety of settings. |
Some Services Typically Covered
by Long Term Care Insurance
- Assistance with Activities of Daily Living (ADL), or functional routines that relate to one's ability to live independently. These activities consist of ambulating, bathing, eating, dressing, transferring (moving about), toileting, continence and mobility.
- Home Health Care
- Adult Day Care
- Respite Care
- Assisted Living Care
- Nursing Home Care, which includes skilled care, intermediate care and custodial care. Custodial care is the most common type of care, which includes the ADL's. Most cognitive care (Alzheimer's, Parkinson's) needs are also considered custodial.
History of Long Term Care Insurance
Since 1983, Medicare has been using a DRG (diagnosis-related group) of guidelines for payment to the hospital of a lump sum, which is determined in advance of the treatment as a "prospective" reimbursement system. This system has given hospitals a powerful incentive to discharge patients as quickly as possible. Nursing homes and convalescent care facilities have become the recovery center for most patients still requiring nursing care after discharge from the hospital. BUT MEDICARE ONLY COVERS 21 DAYS AFTER DISCHARGE FROM THE HOSPITAL AND FOR SKILLED CARE. Prior to 1983, Medicare paid hospitals using a "retrospective" reimbursement system. Medicare reimbursed hospitals for the actual cost of treating a patient covered by Medicare.
The earliest Long-term Care Insurance product was offered in the 1970's. Of the original ten carriers, only two are still offering these products. The early products covered only Nursing Home Care. They were designed to be compatible with Medicare and included a three-day hospital wait and Medicare parallel language regarding skilled care. When Medicare payment system was restructured to Diagnostic Related Groups (DRGs) in 1983, the hospitals moved toward "sicker/quicker" discharge decisions.
The next generation of LTCI policies in the mid to late 1980's recognized the need for Home Health Care compensation. Riders were attached for Home Health Care reimbursement. In the early 90's, Traveler was the first major LTCI issuer to interpret the LTCI contract into "one pool of dollars" and the first to integrate contracts, which covered the full range of benefits including Home Health Care, Adult Day Care, Assisted Living Care and Nursing Home Care. These policies were site neutral meaning that the consumer had a choice of where to use the policy benefits.
Today's LTCI Options
The newest generation of comprehensive LTCI policies offers care outside of America in foreign countries, coverage for family members on the same policy and policies that can be paid up after a specific number of years. All of these enhancements have continued to keep pace with the consumer's input as to what they want in an LTCI policy.
