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# Some Common LTC Policy Provisions

Benefit Amount - The applicant may be offered a choice of either the maximum daily benefit amount for a nursing home stay or covered home health care. Again, higher daily benefit amounts translate to higher policy premiums.

Most LTC policies provide a specified daily benefit during confinement. Traditionally, this benefit has been provided as a maximum daily amount (in other words, reimbursement for charges up to the stated limit, but at a rate of no more than the daily limit). Benefit amounts typically range from $50 up to several hundred dollars per day. However, some insurers provide coverage on an "expense-incurred" basis â€?which is full reimbursement for the actual charges incurred. The maximum policy benefit can be calculated by multiplying the full daily benefit by the total number of days in the benefit period.

As an example, let's say that Jim has a long-term care policy with a 30-day elimination period, a daily benefit of $85 per day and a two-year maximum benefit period. His maximum policy benefit would therefore be $62,050 ($85 per day multiplied by 730 days). If Jim were confined to a nursing home for a total of six months, his benefit amount would be calculated as follows: for the first thirty days no benefit would be paid while the elimination period was being satisfied; for the next six months he would receive $85 per day; and his total benefit would be $15,300 ($85 x 180 days). If Jim's actual incurred charges were more than $85 a day, he would be responsible for paying the additional amount.

Most policies specify the dollar amount per day that will be paid for skilled nursing care. Some may also include sub-limits for special types of care or services. For instance, the benefit for home health care or adult day care is usually a fixed percentage of the specified daily benefit, typically 50%. In addition, the policy may also include a deductible amount that must be satisfied before benefit payments begin.

Benefit Periods - The maximum period for which benefits are paid by long-term care policies can vary, typically from three to five years. Some policies, however, offer unlimited benefit periods. Others may contain both a maximum benefit period per confinement along with a lifetime maximum benefit period. The benefit period can also end when a specified maximum payout amount has been reached.

Care Level - Care level determines whether a policy will pay only if skilled nursing, intermediate, or custodial care â€?as specified in the policy â€?is required at the time the individual enters the nursing home. This is extremely important, since some policies pay only if intermediate or skilled care is involved, thereby excluding custodial care â€?which happens to be the most common type of care required by elders. Better LTC policies will pay benefits regardless of the level of care required.

Hospice Care - This care is commonly offered as an optional benefit under LTC policies. The primary focus of hospice care is pain control, comfort and counseling for terminally ill patients and their families. A hospice is simply a facility whose purpose is to help terminally ill patients die with dignity and with as little suffering as possible. Typically, the expenses incurred from a hospice are room and board and medication for the alleviation of pain.

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