Long Term Care Insurance Reimbursement Option

[Robert123]

Question about how the reimbursement option works.
With the reimbursement option, the insured is reimbursed for actual expenses incurred.
Let's say the insured has a benefit triggering event such as needs assistance with three ADLs(Activities of Daily Living). The insured has a $275 per day maximum benefit which corresponds to about $100,000 per year annualized. Let's say the insured enters a nursing home that costs $100,000 per year. Will the insurance company pay the full $275 per day to cover the full cost of the nursing home stay or will they just cover the portion of the cost of the nursing home that corresponds to the value of the help required to assist in the ADLs that the insured is not able to provide for himself --- e.g. limited to the cost to bathe and help out of bed? As some of the nursing home costs are for basic living needs such as food, housing, utilities that anyone would need to live and would that not be covered costs as part of the daily benefits paid?

 

[rovand]

Hi Robert123 - the carrier should "reimburse" for the actual cost of care, up to the maximum daily benefit. That is, if the cost of care is less than 275 per day in your example, the policy would reimburse up to that amount, with the rmemainder staying in the LTCI "pool of money" to potentially be used later. If the cost of care exceeds 275 per day, the policy would reimburse the 275 per day and the insured would be responsible for any excess. There shouldn't be any correlation between the actual number of ADLs lost. Most policies will have a benefit triger of an inability to perform at least 2 ADLs and, if satisfied, the policy would begin paying after the elimination period ("deductible"), if any, for as long as the pool of money supports.

 

[rovand]

p.s. Robert123 - it is worth noting that my reply refers to a policy that pays its benefits on a "reimbursement" basis; if it is an indemnity or cash policy, the full daily/monthly benefit may be paid regardless of actual charges incurred.

 

[ltcadviser]

Will the insurance company pay the full $275 per day to cover the full cost of the nursing home stay or will they just cover the portion of the cost of the nursing home that corresponds to the value of the help required to assist in the ADLs that the insured is not able to provide for himself ?

Full cost of the nursing home, Robert. Room and board is covered.

 

[rovand]

Thanks for the clarification ltcadviser. In a practical sense, Robert123, NH bills I've seen include all costs in one daily rate on the bill, excluding - perhaps - things like haircuts, transportation (sometimes), etc. That is where a cash or indemnity payment methodology may have some advantages over reimbursement, as reimbursement may not cover some of those "ancillary" costs.

 

[Robert123]

Thank you rovand and Itcadvisor, you answered my question. Then it would seem to me that as the premium for the cash/indemnity option is considerably higher than the reimbursement option, and that the reimbursement option covers most of the costs of the nursing home, then the reimbursement option is the most cost effective?

 

[ltcadviser]

Thank you rovand and Itcadvisor, you answered my question. Then it would seem to me that as the premium for the cash/indemnity option is considerably higher than the reimbursement option, and that the reimbursement option covers most of the costs of the nursing home, then the reimbursement option is the most cost effective?

Well, actually the Securian (Minnesota Life) cash indemnity policy is priced as good or better than competing reimbursement policies.

https://longtermcareinsurancepartne...ong-term-care-insurance-is-now-cash-indemnity

 

[Mr_Ed]

Well, actually the Securian (Minnesota Life) cash indemnity policy is priced as good or better than competing reimbursement policies.

Securian Minnesota Life SecureCare Hybrid Long Term Care Insurance Review - Cash Is King - LTC Partner

that's a bunch of baloney.

 

[Mr_Ed]

Thank you rovand and Itcadvisor, you answered my question. Then it would seem to me that as the premium for the cash/indemnity option is considerably higher than the reimbursement option, and that the reimbursement option covers most of the costs of the nursing home, then the reimbursement option is the most cost effective?

That is correct.

 

[ltcadviser]

that's a bunch of baloney.

There are 2 indemnity linked benefit LTC policies: Securian SecureCare and Nationwide CareMatters. Securian is priced great. Nationwide is not, however Nationwide is repricing next year and rumors are Nationwide’s new pricing will be in line with the competition. We will see.

There are zero indemnity traditional policies today. So, we have nothing to talk about with the traditional arena. Although in your world traditional LTCi is the only LTCi. Which IS baloney.