Shopper’s 2003-052003-05 Guide Long-TermLong-Term CareCare InsuranceInsurance SSeniorenior HHealthealth IInsurancensurance CCounselingounseling PProgramrogram ““SHICPSHICP”” Oklahoma Insurance Department 1-800-763-2828 (405) 521-6628 This guide contains information about insurance for The SHICP volunteer counselors are trained by the individuals shopping for long-term care insurance. SHICP staff, having completed a required 20-hour The Oklahoma Insurance Department, SHICP (3-day) mini-course covering Medicare, Medicare Division, has prepared this publication to assist you in supplements, Medicare+Choice, Medicaid, long-term your understanding of long-term care insurance. care insurance and other health insurance options. If Given the tremendous changes in long-term care you would like to visit with a trained counselor or are insurance policy design within the last few years (for interested in becoming one, please contact SHICP at instance, elimination of prior hospitalization 1-800-763-2828. Many of our volunteers are senior requirements, expansion of available benefits and citizens who enjoy volunteer work or are those who coverage of additional sites) buyers today are clearly by their profession are involved in assisting the aging receiving more benefits for their premium dollars. population in Oklahoma. We want to publicly express appreciation to the many companies and their representatives for providing This booklet is intended as a “guide”. Once you have information for this guide. selected a company, you should consult with the insurance company or its representative to determine Long-term care insurance is a complex product, with policy specifics and review the options that are many variations among companies. Properly available with that company. If a company you are comparing any two policies is a challenge. checking on is not listed, please contact the SHICP Complicating the process even further, many office at (405) 521-6628 or toll-free at 1-800-763- companies offer more than one comprehensive plan 2828 for further information. or offer riders that effectively convert a basic comprehensive plan into an enhanced plan. Consumer brochures are available to Oklahoma Compiling information from many companies-no residents explaining other insurance coverage. matter how careful the data compilation-is still a These, too, are available from: process that produces inconsistencies and possibly Oklahoma Insurance Department errors in the data displayed. Please keep this in mind P.O. Box 53408 when you draw your own conclusions from this Oklahoma City, Oklahoma 73152-3408 guide. For Additional Insurance Department If you need personal assistance and counseling, the Information Call: Senior Health Insurance Counseling Program staff can Toll Free Number Questions on Life & help you understand and sort out problems with: 1-800-522-0071 Health Policies • Medicare Complaints & Claims (405) 521-3541 • Medicare Supplement Insurance (405) 521-2991 Information on • Medicare+Choice Information on Insurance Agents • Medicaid Licensed Companies (405) 521-3916 • Long-Term Care Insurance (405) 521-3966 Property & Casualty • Other Health Insurance Options General Information Rates and Policies (405) 521-2828 Information The Senior Health Insurance Counseling Program (405) 521-3681 “SHICP” trains and utilizes a volunteer staff of Insurance Counselors statewide who provide one-to- one counseling and assistance to senior citizens. Call the SHICP at: These volunteers provide free, accurate, and objective 1-800-763-2828 information that can help Medicare recipients make (405) 521-6628 informed decisions about their health care needs. 1 able of Contents I. What is long-term care? ............................................................................................................ 5 II. How much does long-term care cost? ....................................................................................... 5 III. How would you pay for long-term care services? ..................................................................... 5 IV. Who may need long-term care services?................................................................................... 6 V. Do you need long-term care insurance to pay for services?...................................................... 6 VI. What is a federally tax-qualified long-term care insurance contract? ....................................... 8 VII. How can you buy long-term care insurance? ............................................................................ 9 VIII. How do policies work? .............................................................................................................. 9 A) What services are covered .................................................................................................... 9 B) Where services are covered .................................................................................................. 9 C) How benefits are paid .........................................................................................................10 D) What is not covered (exclusions and limitations) .............................................................. 10 E) How much coverage you will have..................................................................................... 10 F) When you are eligible for benefits (benefit triggers).......................................................... 11 G) When do benefits begin (elimination period) ..................................................................... 12 H) What happens when long-term care costs rise (inflation protection) ................................. 12 I) Other policy options to consider when purchasing coverage .............................................. 13 IX. Will your health affect your ability to purchase a policy? ...................................................... 14 X. What happens if you have pre-existing conditions? ................................................................ 14 XI. Can you renew your coverage? ............................................................................................... 14 XII. What do policies cost?............................................................................................................. 15 XIII. If you already own a policy, should you switch plans or upgrade existing coverage? ............ 15 XIV. Replacing an “old” long-term care policy ............................................................................... 15 3 XV. Long-term care insurance shopping tips ................................................................................. 16 XVI. Points to keep in mind as you shop ......................................................................................... 17 XVII. Reviewing a policy during the “free look” period................................................................... 18 XVIII. Policies from your employer ................................................................................................... 18 XIX. More about inflation ................................................................................................................ 19 A) Exhibit 1—Need for LTC by age........................................................................................ 20 B) Exhibit 2—Which Inflation Adjustment?........................................................................... 21 C) Exhibit 3—For a 50 Year Old: Higher Benefits or Inflation Adjustment? ......................... 22 D) Exhibit 4—For a 79 Year Old: Higher Benefits or Inflation Adjustment? ......................... 23 XX. Glossary ................................................................................................................................... 24 XXI. Long-term care comparison worksheet ................................................................................... 26 XXII. Key to using the long-term care insurance comparison tables ................................................ 28 XXIII. Long-term care insurance premium comparison tables............................................................ 29 4 I. WHAT IS LONG-TERM CARE? living, such as bathing, continence, dressing, Long-term care involves a wide variety of services eating, toileting and transferring. Personal care is for people with a long physical illness, a disability, less involved than skilled care and may be or a cognitive disorder (such as Alzheimer’s provided in many different settings. Disease). Long-term care includes many different services that help people with chronic conditions II. HOW MUCH DOES LONG-TERM overcome limitations that keep them from being CARE COST? independent. Long-term care helps one maintain Long-term care can be expensive. The cost will his or her level of functioning, as opposed to depend on the amount and type of care you need improving or correcting a medical condition. and where you get it. In 1997, the national average Long-term care services include, but are not cost was more than $46,000 for a year of nursing limited to, help with activities of daily living, home care. In Oklahoma, the average cost is less than home health care, respite care, adult day care, the national average. If you receive skilled care in nursing home care and assisted living care. If an your home by a visiting nurse for two hours each individual has a physical illness or disability, they visit, three times a week, the bill would be about will often need hands-on help with their activities $19,300 per year. Personal