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 Insurers are not required to offer, and consumers
are not required to purchase, qualified
long-term care policies. Nonqualified policies may
offer benefits that are more attractive or easier to
obtain than qualified policies and may be more desirable
to certain consumers even if the nonqualified policies
do not offer the tax advantages of qualified policies.
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Many people believe medicare or medicare
supplement policies will pay for
this care if they need it. Medicare will cover nursing home
care if it is part of
the treatment for a covered injury or illness, but care needed
because of
aging is not covered by medicare or medicare supplements.
Medicare and
supplementary insurance pay for skilled nursing care, but
the coverage is
extremely limited (the care must immediately follow a period
of hospital
confinement, and no benefits are provided after the 100th
day). Medicaid
does pay for nursing home care, but provides coverage only
for needy families.
Sadly, many people
must pay for their own nursing home care and eventually
turn to medicaid when their life savings are gone.
LTC policies are still evolving. However,
with attention to the problem of
long-term care firmly focused, legislators and the insurance
industry have
begun to come to grips with the far-reaching ramifications
of health services for an older population. With the federal
government responding to consumer
interests in long-term care coverages, the National Association
of
Insurance Commissioners (NAIC) developed a model to help
state legislatures in an effort to keep regulation on a state
level. More than half of the states currently use the NAIC
or a similar model.
Key issues include
- A benefit period of at least
one year
- Strict restrictions on cancellation,
specifically prohibiting cancellation
due to the insured’s aging; most policies now guarantee
renewability
- Standards for covering preexisting conditions
- A free-look period
- Prohibition of exclusions for
Alzheimer’s
disease
Another factor in the evolution and increasing availability
of LTC policies is that consumers, too, are more aware
of the following:
- Medicare does not cover long-term
care (much to the surprise of most
of the population, who at one time believed medicare
did cover most
nursing home care).
- One in four people are likely to spend at least
some time in a nursing
home after age 65, increasing to about a third if they
live to age 85.
- The average cost for nursing
home confinement is currently about
$3,300 per month and can be as high as $5,000 per month,
depending
on location and level of care. These costs are likely
to continue growing.
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