Your Complete Real-World Guide To Understanding Your Long Term Care Policy

One Step At A Time

Long Term Care Insurance

What Exactly Does It Cover?

Having long term care insurance in this day and age is a pretty common thing.  Generally speaking, people purchase this years in advance, hoping they never actually need  to use it.  Unfortunately, most do use it, plus some.  Being able to hire a caregiver at home is important if the need arises.  Read our Real-World Guide to Finding a Provider here.

For the sake of this discussion, we will be covering long term care insurance as it relates to home care.  Not facility based, although there will be some overlap.  First things first, all policies are unique and this is in no means a blanket coverage article.  Check with your provider for specifics on coverage.  Here are your Important Questions to Ask When Shopping Home Care.



Dig Out A Copy!

Let’s Review The Policy To Begin With

long term care insuracne pic

The first thing you are looking for in your policy is a ‘Home-Care Rider.’

When a rider is on the policy, that will generally cover a portion of your home care expense.  If you do not have a home-care rider, your policy may still cover the services but you will want to get confirmation.  The most important thing you are looking for at this point is any component relating to Home Care Coverage.

Found It?!?  Excellent.  Now that you know your policy does indeed have a Home Care component, let’s take a look at what we need to know as far as specifics.



Professional Organization Providing Home Care Services

  • Generally necessary for coverage to be reimbursed through LTC insurance
  • Often offers different levels of care
  • Common to have nurse on staff
  • Usually operates under state licensure if applicable
  • Company guidelines and operations normally followed
  • Often can handle direct billing with LTC Insurance provider

Private Pay Caregiver (Works Independently)

  • Generally not approved for reimbursement by LTC Insurance (*Occasionally Allowed)
  • May or may not have medical certification (Example:  Certified Nurse Assistance, Licensed Practical Nurse, Registered Nurse)
  • Usually not operating under a Home Care State License
  • Usually no formal company guidelines being followed
  • Generally doesn’t bill directly to LTC Provider
  • Check our Blog On Hiring Private Caregivers




What To Look For In Your Long Term Care Policy For Home Care

It is becoming more and more common for long term care insurance provider’s to require the use of a licensed home care company.  Not all policies require this but you definitely need to know whether or not this is necessary.

For the sake of this discussion now, we are going to assume we must use an agency or other professional organization.  We are looking for private duty home care companies.  We are not looking to the newspaper to find our caregiver.

  • Are they licensed?  This is a common requirement as well.  IF you are in a state that has licensure available for companies offering home care services, there is a good chance you will need to use one that has a license.  
  • One thing to note regarding home care companies and having a license.  Just because the state has a license available, that does not mean that the company has to acquire that license.  Some states make this optional.  You will want to check your state requirements for home care companies for this answer.
  • NOT all states offer a license in the industry of home care.  If you live in one of those states, the provider will obviously have no license.  This will result in you using a non-licensed agency or provider.  Provider’s usually have provisions for the state’s where this is an issue.




What’s an ‘Assessment’

The next component to long term care insurance and getting the reimbursement started is the assessment.  It is not uncommon when starting services, that are going to be reimbursed with your insurance policy, for an initial assessment to be done.

This is generally conducted by a nurse, sometimes hired directly through the insurance carrier and sometimes not.  It is purely up to the carrier and their requirements.  If they do not provide the nurse for the assessment, the agency that you are considering using will probably have a nurse on staff that can do this.  Usually there is some type of determination that needs to be made on whether you or your loved one’s qualify for care.

There are certain things the nurse is looking for in the assessment and whether or not you qualify for reimbursement.  These are often referred to ADL’s.  (Activities of Daily Living)

In short, the assessment is the process in which a long term insurance carrier gets verification that the home care services are indeed needed.  Once this determination has been made, the reimbursement is generally approved and you can start benefiting from your long term care policy.


What is an ADL?

There are generally 5-6 ADL’s that are being considered when an assessment is being done.  For a long term care policy to reimburse, they may have in the policy that you must require assistance with a certain number.  Let’s say 3 for this article.

The Activities of Daily Living Include:

  1. Walking
  2. Feeding
  3. Dressing
  4. Toileting
  5. Bathing
  6. Transfer Assistance

If the assessment results in the determination that that you are in need of 3 of these, the policy would cover the services.  If not, they would probably not cover the service at this time.

Again, this is a general discussion on home care insurance policies and you will want to check your policy for specifics.



Okay!  We’re well on our way.  You know you are approved for services and you have been given the green light.  Your insurance will pay for your home care needs!  This is good news!  Just one more catch!  There may be an exclusionary period!

What is that you ask?  An exclusionary period is an amount of time that you must wait before the policy begins to reimburse.

An example of this would be a 90 day exclusionary period.  This would mean, that for the first 90 days after you were approved, you would be responsible for 100% of the cost.  If you were using the agency 8 hours a day, you would be paying the full 8 hours a day for the next 90 days.

One thing to keep in mind regarding this period, there is not normally a daily minimum you must spend when using home care.  You could, in theory, schedule your caregiver 3 hours a day for the next 90 days.  After the 90 days are up, you could then move to more hours and let the policy pay the full daily maximum.  

Each policy is unique but being aware of whether there is an exclusionary period and what the exact SPECIFICS are is very important.  Not all policies have exclusionary periods but many do.



So, you are no utilizing a home care provider and the bills start coming in.  The next hurdle you may be faced with is reimbursement from your insurance carrier. 

Remember, home care is an ongoing service.  You will be billed on a regular basis from your provider and how will the insurance carrier pay you back?  There are a couple options to explore here.

The first option would be that you continue to pay your provider as the bills come in.  After you do that, you could then submit the required paperwork, usually care logs and invoices, to the long term provider and they would reimburse you. 

This process can be somewhat burdensome and challenging.  You usually fax in the required documents for processing.  If they do not receive the fax, you must send it again.  Once they have the required documentation, they would then cut you a reimbursement check.  Processing times generally range from 1-4 weeks once the process is in place.


The second option, which is much more appealing for most, is setting up an Assignment Of Benefits.  this is a form that you complete and submit to your carrier. 

The carrier from that point forward would be allowed to reimburse your home care service provider directly.  The home care provider must agree to this as well.  It is common for a provider to offer this as part of their service.

If an assignment of benefits is being used, the home care company will normally send in all required documentation to the insurance carrier for you.  This eliminates the need and stress of doing this yourself.

By utilizing an Assignment of Benefits there is a lot less work required by you.  I strongly encourage you to explore this avenue if you are being reimbursed from a long term care insurance policy for home care.


Your Real-World Guide To Understanding Your Long Term Care Policy

Continue To Your Home Care University