Long-Term Care in America

Table of Contents

 

Chapter 1: What is Long-Term Care?

7

 

Defining Long-Term Care

7

 

A Changing Market

7

 

Protecting Assets

8

 

Where Do You Go for Long-Term Care?

9

 

Understanding the Need for Long-Term Care

13

 

 

Chapter 2: Policy Options

15

 

What is a Long-Term Care Policy?

15

 

Policy Issue

15

 

Medicare Benefits

16

 

Part A Skilled Nursing Care

19

 

Part B (Outpatient Care)

20

 

Medigap Insurance Policies

28

 

     Chart

29

 

Protecting Assets

30

 

Medicaid Benefits

31

 

Relying on Insurance for LTC Payment

32

 

     State Requirements

32

 

     Age and Premiums

33

 

The Underage Market

33

 

Increasing Premiums

34

 

Insurance Pricing

35

 

     Premium Mode

36

 

Reducing Benefits to Save Premium

36

 

Policy Renewal

37

 

Policy Review: 30 Day “Free Look”

37

 

Number One Best Selling Unread Document

38

 

No Policy Covers Everything

38

 

Policy Schedule

38

 

Policy Terminology

39

 

Elimination Periods in Policies

41

 

Policy Termination

42

 

Mental Impairments of Organic Origin

42

 

Hospitalization Requirements

42

 

Home and Community Based Benefits

43

 

Bed Reservation Benefit

43

 

Waiver of Premium

44

 

Selecting Other Types of Care

44

 

No Policy Covers Everything

45

 

Age Misstatement

46

 

Forgetfulness: Notifying a Third Part of Premium Due

46

 

Reinstatement of a Lapsed Policy

46

 

 

Chapter 3: The Evolution of a Major Industry

48

 

Born of Need

48

 

Children as Caregivers

48

 

Can Families Make it Through?

49

 

Paid Home Care

50

 

Better Health Equates into Longer Life

50

 

The Early Policy Years

50

 

Policy Benefits Improve Over Time

51

 

Remaining at Home

52

 

Qualifying for Medicare-Funded Home Care

52

 

How Does Medicare Decide What is a Covered Service?

52

 

Finding a Home Care Provider

53

 

Recognizing the Need and the Market

54

 

Insurers Figure Out the Risks of LTC Insurance

54

 

The LTC Marketplace

56

 

Dramatic Policy Improvement, But Also Rising Premium Rates

56

 

 

Chapter 4: Who is at Risk?

57

 

The Loss of Family Members as Caregivers

57

 

Who Will Need Long-Term Care?

57

 

A Graying Nation

58

 

Frailty a Major Issue

58

 

Considering Insurance

59

 

Women are Especially Vulnerable

59

 

Earning Retirement Benefits

60

 

Medicaid is the Major Payer of LTC Benefits

60

 

Medicare Drug Legislation

60

 

Encouraging HMO Coverage

61

 

Health Care for those not yet on Medicare

61

 

Preventing Impoverishment

61

 

Looking at Family History as a Guideline

63

 

Activities of Daily Living

63

 

Following the Statistics

64

 

Case Managers

65

 

Are Premiums Affordable for a Number of Years?

65

 

Who Buys LTC Insurance?

66

 

 

Chapter 5: Designing a Personal Policy

68

 

What Will the Choices Include?

68

 

Daily Benefit Options

69

 

Expense-Incurred and Indemnity Methods of Payment

69

 

Determining Benefit Length

70

 

Policy Structure

70

 

Home Care Options

70

 

Inflation Protection

71

 

     Simple and Compound Protection

71

 

     Required Rejection Forms

71

 

Elimination Periods in LTC Policies

72

 

Policy Type

72

 

Home Modification Benefit

73

 

Rental of Medical Devices

73

 

Caregiver Training

73

 

Restoration of Policy Benefits

73

 

Preexisting Periods in Policies

73

 

Is Hospitalization First Required?

74

 

Choosing Federal Tax-Qualified or State Non-Tax Qualified Policies

74

 

Nonforfeiture Values

75

 

Waiver of Premium

75

 

Unintentional Lapse of Policy

76

 

Bed Reservation Option

76

 

Policy Renewal Features

76

 

Items Not Covered by the LTC Policy

77

 

Extension of Benefits

77

 

Partnership Policies

77

 

     Partnership Plans Protect Assets, Not Income

78

 

     Partnership Benefits are Not Portable

78

 

     Partnership Commissions

78

 

     Robert Wood Johnson Foundation

78

 

     Affordability of Contracts

79

 

     Dollar-for-Dollar Asset Protection

79

 

     Standardized Definitions

80

 

     Minimum Partnership Requirements

80

 

     Benefit Duplication

80

 

     Partnership Publication

80

 

     Partnership Continuing Education Requirements

81

 

 

Chapter 6: Comparing Qualified and Non-Qualified Plans

82

 

HIPAA

82

 

Existing LTC Policies

82

 

Benefit Triggers

82

 

Activities of Daily Living (ADL)

83

 

Understanding the Difference in Benefit Triggers

85

 

Federal Criteria

85

 

State Laws May Vary

87

 

Policy Conversions Were Offered

87

 

Who Will Benefit?

88

 

Defining “Chronically Ill”

88

 

Qualifying Contracts for Tax-Favored Status

89

 

Accelerated Death Benefits

89

 

Purchasing Contracts for Financial Protection

89

 

Pre-1997 Long-Term Care Policies

90

 

The Treasury Responds with Exceptions

90

 

 

Chapter 7: The Deciding Factors

92

 

Who is Most Likely to Buy LTC Insurance?

92

 

Ongoing Long-Term Medical or Personal Care

93

 

Some States Requiring Specific LTC Education

93

 

Limited Benefits in Early Products

94

 

No Durational Coverage Under Medicare

94

 

Remaining at Home

94

 

Home Care Insurance Policies

95

 

Home Care Benefits Under Medicare

96

 

Medicare Qualification

96

 

Assessing Care at Home

97

 

Gatekeepers

98

 

Protecting Against Catastrophic Costs First

98

 

Knowing Industry Terminology

98

 

Receiving the Benefits Expected

101

 

The Buying Decision

101

 

 

Chapter 8: Selecting a Suitable Company

102

 

An Ethical Obligation to the Consumer

102

 

     Assets = liabilities + owner’s equity

103

 

Guaranty Funds

105

 

Signs of Company Trouble

106

 

 

Chapter 9: Alternatives to Purchasing Insurance

108

 

Assessing the Need

108

 

Realistically Speaking

108

 

Liabilities

111

 

Estate Planning Tools

111

 

Asset Transfer

112

 

Reverse Mortgages

113

 

Paid Family Members

114

 

Accelerated Life Insurance Benefits

114

 

The Largest Payer of LTC: Medicaid

115

 

Asset Transfers for Medicaid Eligibility

116

 

Trust Shelters

118

 

Catastrophic Coverage Act of 1988

119

 

Information Required When Applying to Medicaid

120

 

Viatical Settlements

120

 

Any Income Available

121

 

 

Chapter 10: Agent Ethics

122

 

According to Webster (definition of ethics)

122

 

Establishing Insurance Ethics

123

 

Linking Risk Management and Ethics

126

 

Adequate Underwriting is an Ethical Duty

127

 

Due Diligence

130

 

Long-Term Care Due Diligence

131

 

Product Suitability

134

 

     Long-Term Care Insurance Suitability Worksheet

134

 

     Suitability Determination/Personal Suitability Worksheet

136

 

     Long-Term Care Insurance Suitability Letter

138

 

Insurance Dilemma

139

 

Confidentiality

141

 

Simultaneous Representation

141

 

Common Sense

141

 

Promoting Ethical Conduct

141

 

Presenting Insurance Benefits

142

 

Minimizing Misunderstandings

143

 

The Ethical Path

144

 

Professional Ethics

145

 

Establishing a Code of Ethics

145

 

Mandated Education

146

 

     Keeping track of CE (chart)

147

 

Principles Versus Rules

148

 

Legal Issues

149

 

     Integrity

150

 

     Objectivity / Competence

151

 

     Fairness / Confidentiality / Professionalism / Diligence

153

 

Express and Ostensible Authority

153

 

Ethics and Risk Control

154

 

Agent Liability

155

 

     Company Insolvencies

155

 

     Third-Party Liability

155

 

     Hidden Costs of Litigation

156

 

     Documenting Procedures for Self Protection

156

 

     Unwritten, Invisible or Implied

157

 

Honesty – A Moral and Legal Obligation

158

 

Churning Policies

158

 

A Personal Choice

159

 

The Exceptional Man

160

 

Taking the Moral Path

161

 

Developing a Work Ethic

162

 

Acting in the Best Interest of the Majority

162

 

Listening Our Way to Success

163

 

Fulfilling Our Obligation to the Client

163

 

Policy Presentations

164

 

Duty to Represent Insurers Fairly

164

 

Acknowledging Our Moral Obligations

165

 

Agents Are Also Clients

165

 

Is It Too Good to be True?

166

 

 

United Insurance Educators, Inc.

8213 352nd Street East

Eatonville, Washington 98328-8638

 

Fax: (253) 846-7536

 

Email: mail@uiece.com

Website: www.uiece.com