Risk Management / Insurance

Types of LTC in order

Nursing home (24 hr) —> Assisted Living—> Adult Day Health Care—> Home health aide services—>Homemaker Services

Medicare provision for ‘skilled nursing care’

Limited time following hospitalization.

Days 1-20: $0 per day

Days 21-100: $204 per day

Days 101 on: Patient pays all

Elimination Period in LTC

Waiting period before benefits become payable. 0-365 days range

Daily Benefit in LTC

Maximum amount that a policy will reimburse for daily LTC

Policy lifetime maximum benefit in LTC

Daily benefit x Benefit Period

Pool of Money Structure in LTC

If cost of care is less than max daily benefit, could last longer

Riders in LTC

Add-on features. Inflation protection most important

Renewability for qualified LTC?

Must be guaranteed renewable

Requirement for qualified LTC for expenses covered by medicare

Cannot reimburse expenses already under medicare

Requirement for qualified LTC cash surrender value

Cannot have a cash surrender value

Requirement for qualified LTC handling of policy dividends

Must be used to reduce future premiums or increase future benefits

Requirement for qualified LTC - limitations and exclusions

Prohibited unless pre-existing within 6 months of application

Requirement for qualified LTC - skilled nursing care

Cannot provide for skilled nursing care only OR require a prior hospitalization

Requirement for qualified LTC -clause for misrepresentation

Contract must have 2 year incontestable clause for misrepresentation

Triggers for LTC benefits

2 of 6 ADLS expected to last at least 90 days OR Substantial cognitive impairment

Acronym for LTC Benefits triggers

BED COT

B in BED COT

Bathing

E in BED COT

EatingD

D in BED COT

Dressing

C in BED COT

Continence

O in BED COT

On/Off Toilet

T in BED COT

Transferring (place to place)

Partnership LTCi

Between states and companies for qualified LTCi

Provides additional asset protection

Protects amount paid under LTCi by adding to medicaid spend-down limit

Any-Occupation — Disability Definitions

Benefits only payable if they can’t engage in any occupation

Own-Occupation — Disability Definitions

Payable if they cannot perform their own occupation

Modified Own-Occupation— Disability Definitions

Common hybrid approach—definition follows favorable own-occ, switches to any-occ after period

Social Security Disability

Toughest to satisfy; Any-Occ, Must be expected to last 12 months or more or result in death, 5 month elimination period

Taxation of Disability Income if Employer Paid Premiums

Benefit received are taxable is employer paid

Employee Paid Premiums taxability

Nontaxable benefits.

Also nontaxable if employer paid BUT included in taxable wages

If pre-tax dollars, it is taxable