LTC Basics
There are four basic variables that affect the cost of a long-term
care insurance plan. After your age, health, & marital status, the
choices you make amongst these options will have the biggest impact on
the amount of premium you will pay. Review the various types of options
with an LTC professional to help determine what’s best for you.
- Daily benefit: The amount of money the insurance
company pays on a daily basis for your care. You can select daily
benefit amounts from $50 to $500 per day, depending on the carrier. Some
plans pay on a daily basis, others on a weekly or monthly basis.
- Benefit Period: The length of time the insurance company
will pay once you qualify for long-term care benefits. You select a specific
number of years (such as 1,2,3,4,5, to 10 years) or you can choose coverage
for an unlimited period. This creates a benefit pool which you
draw down from called your Lifetime Benefit. When you
meet the benefit triggers and have satisfied your Elimination period.you
can start to use the pool. For example, if you have
a 3 year benefit pool, it could last longer than three years if your
needs are intermittent during the first year.
- Elimination Period: (a time deductible/waiting period).
The number of days you pay for care before the insurance begins to pay.
With long-term care insurance, the deductible period is computed in days
instead of dollars. Elimination period options include 0, 30, 60 90
days up to as much as 2 years.
- Inflation Protection: To protect yourself from
the rising cost of care, inflation options are available which automatically
increase the Daily Benefit. The most common options
are 5% Simple or 5% Compound.
When Do Benefits Begin?
Most policies trigger benefits when your doctor certifies that you need
assistance with two or more Activities of Daily Living (ADLs) and are expected
to need such help for at least 90 days, or if you suffer severe cognitive
impairment that requires substantial supervision. ADLs are a measure a
person’s ability to live independently and include bathing, dressing,
transferring (getting in and out of bed/chair), toileting, eating, and
continence.
To learn more about LTC4CPAS, CalCPA's members-only long-term care
program, contact a CalCPA long-term care specialist toll-free at (866) 799-9775.
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