Using a Long-Term Care Policy You Already Have
Policies bought decades ago are routinely forgotten, and routinely claimed badly. How to find one and how to actually get it to pay.
A surprising number of families discover, months into paying privately for care, that a parent bought a long-term care policy in the nineties and never mentioned it. An equally surprising number have a policy, claim on it, get refused, and give up.
Both are avoidable.
Finding out whether one exists
If a parent cannot remember, look for: annual premium notices in the mail or bank statements, a policy document in whatever filing system exists, a former employer or union that may have offered group cover, and the records of any financial adviser or insurance agent they used.
Check bank and card statements for regular payments to an insurer. A premium being paid automatically for twenty years is easy to overlook and is the clearest evidence there is.
Your state insurance department may also be able to help trace policies from companies that have merged or changed name, which many have.
Do this while your parent can still tell you things. Tracing a policy from scratch after somebody has lost the ability to remember which company they used is considerably harder, and sometimes impossible.
Read the policy before you need it
Policies vary enormously, and the terms of one bought in 1994 bear little resemblance to a modern one. The things to establish:
- Does it cover care at home, or only in a facility? Older policies are frequently facility-only, which is the single most important thing to know.
- What triggers a claim? Usually needing help with a set number of activities of daily living, or a cognitive impairment. Find out which activities count and how many are required.
- What is the elimination period? A waiting period, often measured in days of care received, during which you pay. Ninety days is common, and it must be budgeted for.
- What is the daily or monthly benefit, and is there inflation protection? A policy paying a fixed amount set decades ago may now cover a fraction of the cost.
- Is there a lifetime maximum, in money or in time?
- Does it require a licensed agency, or will it pay for independently hired caregivers? Many require the former.
The claim process, and why it goes wrong
Most denials are not really disputes about entitlement. They are paperwork failures.
Notify the insurer as soon as you think a claim may arise, before care starts if possible. Ask them, explicitly, what documentation they require and in what form. Get the answer in writing.
Then be meticulous. Insurers typically want an assessment establishing that the trigger is met, a plan of care, and ongoing documentation of the care actually delivered, usually including dates, times and who provided it.
This is where using an agency helps considerably. A good agency has done this before, keeps the records the insurer wants as a matter of routine, and can produce them without a scramble. Where visits are electronically verified, the documentation is far stronger than anything reconstructed afterwards.
Start the paperwork before the care, not after. Retrospective claims for care already delivered are the ones that get refused, because the evidence the insurer wanted was never collected.
If it is denied
Appeal. Denials are frequently reversed, and the reasons are often procedural: the wrong form, missing documentation, an assessment that did not use the language the policy requires.
Ask for the specific reason in writing, and compare it against the policy wording. If the insurer says the trigger was not met, look at exactly how the assessment described your father’s difficulties, because assessments written in reassuring language routinely undercut a valid claim.
Your state insurance department handles complaints about insurers, and that route is worth using where an insurer is being unreasonable.
Keep paying the premiums
Two traps here. Cancelling a policy that seems expensive shortly before it would have been needed is a common and irreversible mistake. And a policy can lapse simply because somebody with early dementia stopped paying the bills, which is why many policies allow a third party to be notified of non-payment.
Set that up if it is available. It costs nothing and it protects decades of premiums.
If there is no policy
Then the realistic routes are Medicaid for those who qualify, veterans’ benefits where there is service history, and private payment. Our guides to Pennsylvania Medicaid waivers, veterans benefits and budgeting for home care cover each of them.
Coordinating a policy with an agency
Tell the agency at the outset that a claim will be involved. It changes what they document from day one, and retrofitting records to satisfy an insurer months later is difficult and sometimes impossible.
Specifically, ask them to confirm they can supply: dated visit records showing start and end times, the name of the caregiver on each visit, a description of the tasks performed against the care plan, and invoices in the format the insurer wants. Most reputable agencies do all of this as standard, but it is worth establishing rather than assuming.
Ask the insurer too whether they pay the agency directly or reimburse you. Reimbursement means carrying the cost yourself for weeks or months, which changes the cash flow considerably and catches families out.
Hybrid and rider policies
Some people hold long-term care benefits attached to a life insurance policy or an annuity rather than a standalone policy, and frequently do not think of it as long-term care cover at all.
If a parent has life insurance, it is worth checking whether it carries an accelerated death benefit or a long-term care rider. These are easy to miss, because the paperwork describes a life policy and the relevant clause sits several pages in.
