Long-Term Care Insurance: Using Your Parent's Policy
Your parent bought long-term care insurance years ago. Now they need care, and you're not sure how to use it. These policies can be confusing, with terms like "elimination period," "benefit triggers," and "daily maximums." Here's how to understand and use long-term care insurance effectively.
Many families don't know their parent has long-term care insurance until care is needed. Look through financial documents, check bank statements for premium payments, or ask their financial advisor or insurance agent.
Understanding the Policy Basics
Daily/Monthly Benefit
The maximum amount the policy pays per day or month. Example: A $200/day benefit = $6,000/month maximum. If care costs more, you pay the difference. If it costs less, you only receive what's billed (in most policies).
Benefit Period
How long benefits will be paid. Common periods: 2 years, 3 years, 5 years, or lifetime. A $200/day policy with a 3-year benefit period has a total pool of about $219,000.
Elimination Period (Waiting Period)
Number of days you must pay out of pocket before benefits start. Common: 30, 60, 90, or 100 days. This is like a deductible. Your parent pays for care during this period.
Benefit Triggers
The conditions that must be met to start receiving benefits. Usually: inability to perform 2 or more Activities of Daily Living (ADLs) OR cognitive impairment. ADLs include bathing, dressing, eating, toileting, transferring, and continence.
Inflation Protection
If the policy includes inflation protection, benefits increase over time. A policy bought 20 years ago with 5% compound inflation may now pay significantly more than the original amount.
What Long-Term Care Insurance Covers
Typically Covered
- Nursing home care: Skilled nursing facilities
- Assisted living: Most policies cover this
- Home care: Most policies include this
- Adult day care: Often covered
- Memory care: Usually included
- Hospice: Often covered
May Not Be Covered
- Care from family members (some policies allow this)
- Medical treatments (that's health insurance)
- Modifications to the home
- Care in facilities not licensed in your state
- Care outside the US (varies by policy)
Coverage varies significantly between policies. What's covered in one policy may be excluded in another. Read your parent's specific policy or call the insurance company to understand exactly what's included.
Filing a Claim
Step 1: Contact the Insurance Company
- Call the number on the policy or premium notice
- Request a claim packet
- Ask about the claims process and timeline
- Get the name of a claims representative
Step 2: Gather Documentation
- Policy documents
- Medical records showing condition
- Doctor's statement of need
- Assessment of ADL limitations
- Care plan from proposed provider
Step 3: Complete the Assessment
- Insurance company may send a nurse for assessment
- They verify the level of care needed
- They confirm benefit triggers are met
- This may take several weeks
Step 4: Begin Care
- Start the elimination period
- Keep records of all care and payments
- Submit bills to insurance
- Track your benefit usage
Don't wait until your parent is in crisis to file a claim. Start the process as soon as you think care may be needed. The elimination period begins once care starts and the claim is approved, so filing early gets you through that waiting period sooner.
Common Issues and Solutions
Claim Denied
- Request a written explanation of the denial
- Review the policy to understand requirements
- Get additional documentation from doctors
- File an appeal with more evidence
- Contact your state insurance department if needed
- Consider hiring an attorney for large claims
Benefits Too Low
- Check if there's inflation protection that increases benefits
- Look for unused benefits that can be applied
- Consider supplementing with other resources
- Negotiate with care providers
Policy Lapsed
- Check if there's a grace period to reinstate
- Look for nonforfeiture benefits (reduced paid-up coverage)
- Check if premium was waived and not communicated
- Contact state insurance department about reinstatement rights
Home Care vs. Facility Care
Policies May Treat Them Differently
- Some policies have different benefit amounts for home vs. facility
- Home care may be 50-100% of the facility benefit
- Some policies require using a licensed agency for home care
- Family caregiver payments may or may not be allowed
Using the Policy for Home Care
- May need to use a licensed home care agency
- Caregiver may need specific qualifications
- Policy may have minimum hour requirements
- Some policies allow hiring family members (often with restrictions)
Coordinating with Other Coverage
Medicare
- Medicare covers short-term skilled care after hospitalization
- LTC insurance covers longer-term or custodial care
- No duplication—LTC kicks in when Medicare coverage ends
Medicaid
- LTC insurance benefits count as income for Medicaid
- This can affect Medicaid eligibility
- Some policies have "Partnership" status for Medicaid asset protection
Health Insurance
- Health insurance covers medical treatment
- LTC insurance covers assistance with daily living
- They cover different things
If Your Parent Doesn't Have Coverage
It's Too Late to Buy
If your parent is already ill or needs care, they cannot buy long-term care insurance. Insurers require medical underwriting and won't cover pre-existing conditions.
Alternatives
- Pay out of pocket: Use savings and income
- Medicaid: For those with limited assets (after spend-down)
- Veterans benefits: Aid & Attendance for veterans
- Life insurance: Some policies allow accelerated death benefits for care
- Reverse mortgage: Use home equity
- Family care: Provide care yourself (or with paid help)
Protecting the Policy
Keep Premiums Paid
- Set up automatic payments
- Notify family members about the policy
- Watch for premium increase notices
- Budget for potential premium increases
Premium Increases
- Insurance companies can raise premiums
- This has happened significantly in recent years
- Options if premium increases: pay the increase, reduce benefits, or drop coverage
- Dropping coverage loses all paid premiums—usually not recommended
After paying premiums for years, the worst outcome is letting the policy lapse right before needing it. If premiums become unaffordable, explore options with the insurance company like reduced benefits before canceling entirely.