Long-term Care Insurance: Examine Policies Carefully

Source: AARP.org | August 16, 2007

Most people don't like to think they will ever need long-term care, but as Iowa's population continues to age, all Iowans will increasingly rely on long-term care services to remain independent.

Ordinary health insurance and Medicare usually do not pay for long-term care expenses. Medicaid, the federal/state health insurance program, only pays for long-term care if you've already spent most of your savings and assets. Long-term care insurance is one way to help cover the high costs of long-term care, but it is not necessarily for everyone.

If you decide long-term care insurance is for you, consider these important policy feature guidelines as you assess your options.

Make sure the policy:

• Clearly explains when you will be eligible for coverage and how your eligibility will be determined.
• Includes coverage for home and community based long-term care services to allow you to remain in your home as long as possible.
• Offers choices for inflation protection, such as an automatic increase in your benefit on an annual basis. (This is especially critical for purchasers under age 70).
• Does not require that you spend time in a hospital before receiving benefits.
• Will be renewed as long as you pay the premiums.
• Lets you stop paying premiums once you begin receiving benefits.
• Has one deductible for the life of the policy.
• Automatically covers pre-existing conditions if you disclosed them when you applied.
• Allows you to downgrade your coverage if you cannot afford the premiums.
• Includes coverage for dementia.
• Provides at least one year of nursing care and home health care coverage.
• Allows the right to cancel the policy for any reason within 30 days of purchase and receive a refund.

Finally, remember these consumer protections: always shop and compare policies and prices; never pay an agent in cash -only write a check directly to the insurance company; and when you get your policy, review it immediately to ensure the policy covers what you paid for.

Unfortunately, not every consumer who purchases long-term care insurance gets what they bargained and paid for. Long-term care insurance fraud is one of the reasons AARP supports stronger protections for Iowa consumers against fraud.

According to the Iowa Attorney General's office, Iowa is the only state in the nation (including the Virgin Islands and Puerto Rico) that does not give citizens a private cause of action (i.e., legal recourse) to fight consumer fraud. Last session, AARP supported SF 520, a bill from the Iowa Attorney General which would have allowed Iowans to pursue a legal case to recover damages from a company that defrauds them. The Iowa legislature did not vote on this legislation. AARP asks all Iowans to contact their local representatives, and ask them support the passage of SF 520 in 2008. Give Iowans a tool to fight back against all types of consumer fraud, including long-term care insurance fraud.

Other Resources

• Iowa General Assembly
  Contact your local representatives, and ask them support Consumer Right of Action with the passage of SF 520 in 2008.
• Long Term Care
  Need more information about Long Term Care insurance?
• Senior Health Insurance Information Program
  Iowa's Senior Health Insurance Information Program can help you make the right decision on long term care insurance.