Guide to Long-term Care Insurance
By: America's Health Insurance Plans
Guide to
Long-TermCare
About AHIP Insurance
America’s Health Insurance Plans is a national
association representing nearly 1,300 members
providing health benefits to more than 200 million
Americans. AHIP and its predecessor organizations
have advocated on behalf of health insurance plans
for more than six decades.
As the voice of America’s health insurers, our goal
is to advance a vibrant, private-public health care
system, one characterized by consumer choice,
product flexibility and innovation. We support
empowering consumers with the information they
need to make health care decisions, promoting
health care quality in partnership with health care
providers, and expanding access to affordable
health care coverage to all Americans.
AHIP’s mission is to effectively advocate for a
workable legislative and regulatory environment at
the federal and state levels, one in which our members
can advance their vision of a health care system
that meets the needs of consumers, employers
and public purchasers.
www.ahip.org
Providing health
benefits to over
200 million
Americans
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Contents
What is long-term care?..........................................2
Are you likely to need long-term care?....................2
What does long-term care cost? ..............................3
Who pays the bills? ................................................4
Where can I get long-term care coverage? ..............5
What are the types of long-term care policies? ........5
What do policies cost? ............................................6
Will my premiums increase as I get older? ..............8
What do long-term care insurance policies cover? ..8
What is not covered? ..............................................9
What else should I know before I buy? ................10
What about switching policies? ............................12
What should I look for in a policy? ......................12
Before you buy ....................................................13
Long-term care policy checklist ............................14
HIPAA’s impact on long-term care insurance ......16
Tax treatment ......................................................16
Consumer protection standards ............................17
If you need help ..................................................19
America’s Health Insurance Plans
601 Pennsylvania Ave, NW
South Building · Suite 500
Washington, DC 20004
(202) 778-3200 · www.ahip.org
friends are the sole caregivers for 70 percent of elderly
people. A study by the U.S. Department of Health
and Human Services indicates that people age 65 face
at least a 40 percent lifetime risk of entering a nursing
home sometime during their lifetime. About 10
percent will stay there five years or longer.
The American population is growing older, and the
group over age 85 is now the fastest-growing segment
of the population. The odds of entering a nursing
home, and staying for longer periods, increase with
age. In fact, statistics show that at any given time, 22
percent of those age 85 and older are in a nursing
home. Because women generally outlive men by
several years, they face a 50 percent greater likelihood
than men of entering a nursing home after age 65.
While certainly older people are more likely to need
long-term care, your need for long-term care can
come at any age. In fact, the U.S. Government
Accountability Office estimates that 40 percent of the
13 million people receiving long-term care services are
between the ages of 18 and 64.
What does long-term care cost?
Long-term care can be very expensive and the real
amount you will spend depends on the level of
services you need and the length of time you need
care. One year in a nursing home can average more
than $50,000. In some regions, it can easily cost twice
that amount.
Home care is less expensive but it still adds up.
Bringing an aide into your home just three times a
week (two to three hours per visit) to help with
dressing, bathing, preparing meals, and similar
household chores can easily cost $1,000 a month or
$12,000 a year. Add in the cost of skilled help, such as
physical therapists, and these costs can be much
greater.
The average monthly fee assisted living facilities
charge is around $2,000. This includes rent and most
additional fees. Some residents in the facility may pay
significantly more if their care needs are higher.
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What is long-term care?
Insurance is an important tool for protecting yourself
against risk. For instance, health insurance pays your
doctor and hospital bills if you get sick or injured. But
how can you help protect yourself against the
significant financial risk posed by the potential need
for long-term care services, either in a nursing home
or in your own home?
Long-term care goes beyond medical care and nursing
care to include all the assistance you could need if you
ever have a chronic illness or disability that leaves you
unable to care for yourself for an extended period of
time. You can receive long-term care in a nursing
home, assisted-living facility, or in your own home.
Though older people use the most long-term care
services, a young or middle-aged person who has been
in an accident or suffered a debilitating illness might
also need long-term care.
Beyond nursing homes, there is a range of services
available in the community to help meet long-term
care needs. Visiting nurses, home health aides, friendly
visitor programs, home-delivered meals, chore services,
adult daycare centers, and respite services for caregivers
who need a break from daily responsibilities
can supplement care given by family members.
These services are becoming more widely available.
Some or all of them may be found in your
community. Your local Area Agency on Aging or
Office on Aging can help you locate the services you
need. Call the Eldercare Locator at 800-677-1116 to
identify your local office.
Are you likely to need long-term
care?
You may never need long-term care. But about 19
percent of Americans aged 65 and older experience
some degree of chronic physical impairment. Among
those aged 85 or older, the proportion of people who
are impaired and require long-term care is about 55
percent. In the year 2020, some 12 million older
Americans are expected to need long-term care. Most
will be cared for at home. Family members and
Where can I get long-term
care coverage?
Although long-term care insurance is relatively new,
more than 100 companies now offer coverage.
Long-term care insurance is generally available
through groups and to individuals. Group insurance
is typically offered through employers, and this type
of coverage is becoming a more common benefit. By
the end of 2002, more than 5,600 employers were
offering a long-term care insurance plan to their
employees, retirees, or both.
Individual long-term care insurance coverage is a good
option if you are not employed, work for a small
company that doesn’t offer a plan, or are selfemployed.
Choosing a policy requires careful shopping
because coverage and costs vary from company to
company and depend on the benefit levels you choose.
What are the types of
long-term care policies?
Several types of policies are available. Most are known
as “indemnity” or “expense incurred” policies.
An indemnity or “per diem” policy pays up to a fixed
benefit amount regardless of what you spend. With
an expense-incurred policy, you choose the benefit
amount when you buy the policy and you are
reimbursed for actual expenses for services received up
to a fixed dollar amount per day, week, or month.
Today, many companies also offer “integrated
policies” or policies with “pooled benefits.” This type
of policy provides a total dollar amount that may be
used for different types of long-term care services.
There is usually a daily, weekly, or monthly dollar
limit for your covered long-term care expenses.
For example, say you purchase a policy with a
maximum benefit amount of $150,000 of pooled
benefits. Under this policy you would have a daily
benefit of $150 that would last for 1,000 days if you
spend the maximum daily amount on care. If,
however, your care costs less, you would receive
benefits for more than 1,000 days.
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Who pays the bills?
For the most part, the people who need the care pay
the bills. Individuals and their families pay about onefourth
of all nursing home costs out-of-pocket.
Generally, long-term care isn’t covered by the health
insurance you may have either on your own or
through your employer.
What about the government? Generally, neither
Medicare nor Medicaid cover long-term care. People
over 65 and some younger people with disabilities
have health coverage through the federal Medicare
program. Medicare pays only about 12 percent for
short-term skilled nursing home care following
hospitalization. Medicare also pays for some skilled
at-home care, but only for short-term unstable
medical conditions and not for the ongoing assistance
that many elderly, ill, or injured people need.
Medicare supplement insurance (often called
Medigap or MedSupp) is private insurance that helps
cover some of the gaps in Medicare coverage. While
these policies help pay the deductible for hospitals
and doctors, coinsurance payments, or what Medicare
considers excess physician charges, they do not cover
long-term care.
Medicaid – the federal program that provides health
care coverage to lower-income Americans – pays
almost half of all nursing home costs. Medicaid pays
benefits either immediately, for people meeting
federal poverty guidelines, or after nursing home
residents exhaust their savings and become eligible.
Turning to Medicaid once meant impoverishing the
spouse who remained at home as well as the spouse
confined to a nursing home. However, the law
permits the at-home spouse to retain specified levels
of assets and income.
It’s impossible to predict what kind of care you might
need in the future, or know exactly what the costs will
be. But like other insurance, long-term care insurance
allows people to pay a known, affordable premium for
a policy to protect against the risk of much larger outof-
pocket expenses.
Since it’s likely you will need long-term care, you
should learn about the insurance coverage available to
help that’s most appropriate for you.
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AGE
In 2002, a policy offering a $150 per day long-term
care benefit for four years, with a 90-day deductible,
cost a 50-year-old a national average of $564 per year.
For someone who was 65 years old, the national
average cost was $1,337, and for a 79-year-old, the
national average cost was $5,330. The same policy
with an inflation protection feature cost, on average
nationally, $1,134 at age 50, $2,346 at age 65, and
$7,572 at age 79. Please note that these are only
national averages. The cost of long-term care varies
significantly by state. For the cost of care and coverage
in your area, check with a representative of a long-term
care insurer, an insurance agent, or financial adviser.
Premiums generally remain the same each year (unless
they are increased for an entire class of policyholders
at once). That means that the younger you are when
you first buy a policy, the lower your annual premium
will be.
BENEFITS
The amount of your premium also depends on the
amount of the daily benefit and how long you wish
that benefit to be paid. For example, a policy that pays
$100 a day for up to five years of long-term care costs
more than a policy that pays $50 a day for three years.
ELIMINATION OR DEDUCTIBLE PERIODS
Elimination or deductible periods are the number of
days you must be in residence at a nursing home or
the number of home care visits you must receive
before policy benefits begin. For instance, with a 20-
day elimination period your policy will begin paying
benefits on the twenty-first day. Most policies offer a
choice of deductible ranging from zero to 180 days.
The longer the elimination or deductible period, the
lower the premium.
However, longer elimination periods also mean higher
out-of-pocket costs. For instance, if have a policy with
a 100-day waiting period and you go to a nursing
home for a year, you must pay for 100 days of care. If
your stay costs $150 a day, your total cost would be
$15,000. With a 30-day elimination period, your cost
would be only $4,500.
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There are no policies that guarantee to cover all
expenses fully.
You usually have a choice of daily benefit amounts
ranging from $50 to more than $300 per day for
nursing home coverage. The daily benefit for at-home
care may be less than the benefit for nursing home
care. It’s important to keep in mind that you are
responsible for your actual nursing home or home
care costs that exceed the daily benefit amount you
purchased.
Because the per-day benefit you buy today may not
be enough to cover higher costs years from now, most
policies offer inflation adjustments. In many policies,
for example, the initial benefit amount will increase
automatically each year at a specified rate (such as 5
percent) compounded over the life of the policy.
Some life insurance policies offer long-term care
benefits. With these accelerated or living benefits
provisions, under certain circumstances a portion of
the life insurance benefit is paid to the policyholder
for long-term care services instead of to the
beneficiary at the policyholder’s death. Some
companies make these benefits available to all
policyholders; others offer them only to people
buying new policies.
What do policies cost?
The cost of long-term care insurance varies widely,
depending on the options you choose. For example,
inflation adjustments can add between 40 and more
than 100 percent to your premium. However, this
option can keep benefits in line with the current cost
of care.
The actual premium you will pay depends on many
factors, including your age, the level of benefits, and
the length of time you are willing to wait until
benefits begin. A licensed long-term care insurance
agent or a financial advisor can help in balancing
policy features and premium cost.
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insured’s home, like building ramps for wheelchairs or
modifications to a kitchen or bathroom. A health care
professional develops the alternate plan of care, the
insured or insurer may initiate the plan, and the
insurer approves it.
You should know that the benefit amount paid for
alternate care would reduce the maximum or lifetime
benefit available for later confinement in a long-term
care facility. Policies may limit the expenses covered
under this benefit (for instance, 60 percent of the
lifetime maximum limit).
Alzheimer’s disease and other organic cognitive disabilities
are leading causes for nursing home admissions
and worry for many older Americans. These conditions
are generally covered under long-term care policies.
What is not covered?
All policies contain limits and exclusions to keep
premiums reasonable and affordable. These are likely
to differ from policy to policy. Before you buy, be sure
you understand exactly what is and is not covered
under a particular policy.
PREEXISTING CONDITIONS
Preexisting conditions are health problems you had
when you became insured. Insurance companies may
require that a period of time pass before the policy
pays for care related to these conditions. For example,
a company may exclude coverage of preexisting
conditions for six months. This means that if you
need long-term care within six months of the policy’s
issue date for that condition, you may be denied
benefits. Companies do not generally exclude
coverage for preexisting conditions for more than six
months.
SPECIFIC EXCLUSIONS
Some mental and nervous disorders are not covered.
Alcoholism and drug abuse are usually not covered,
along with care needed after an intentionally selfinflicted
injury.
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When you’re considering a long-term care policy, you
should determine, not just how much you can pay for
premiums but also how long you could pay for your
own care. Bear in mind that while 45 percent of
nursing home stays last three months or less, more
than one-third last one year or longer. The more
costly longer stay may be the devastating financial
blow that you may want to insure against.
Will my premiums
increase as I get older?
In general, premiums will stay the same each year. If
they do increase, it will be for the whole class of
policyholders, not because you as an individual have
aged or your health has deteriorated.
What do long-term care
insurance policies cover?
Long-term care services are provided when a person
cannot perform certain “activities of daily living”
(ADLs), or is cognitively impaired because of senile
dementia or Alzheimer’s disease. Most commonly the
ADLs used to determine the need for services include
bathing, dressing, transferring (getting from a bed to a
chair), toileting, eating, and continence.
Today’s policies cover skilled, intermediate, and
custodial care in state-licensed nursing homes. Longterm
care policies usually also cover home care
services such as skilled or nonskilled nursing care,
physical therapy, homemakers, and home health aides
provided by state-licensed and/or Medicare-certified
home health agencies.
Many policies also cover assisted living, adult daycare
and other care in the community, alternate care, and
respite care for the caregiver.
“Alternate care” is nonconventional care and services
developed by a licensed health care practitioner that
serve as an alternative to more costly nursing home
care. Benefits for alternate care may be available for
special medical care and treatments, different sites of
care, or medically necessary modifications to the
RENEWABILITY
Virtually all long-term care policies sold to individuals
are guaranteed renewable; they cannot be canceled as
long as you pay your premiums on time and as long
as you have told the truth about your health on the
application. Premiums can be increased, however, if
they are increased for an entire group of policyholders.
The renewability provision, normally found on the
first page of the policy, specifies under what conditions
the policy can be canceled and when premiums may
increase.
NONFORFEITURE BENEFITS
This benefit returns to policyholders some of their
benefits if they drop their coverage. Most companies
now offer this option. The most common types of
nonforfeiture benefits offered today are “return of
premium” or a “shortened benefit period.”
With a “return of premium” benefit, the policyholder
receives cash, usually a percent of the total premiums
paid to date after lapse or death. With a “shortened
benefit period,” the long-term care coverage continues
but the benefit period or duration amount is reduced
as specified in the policy. A nonforfeiture benefit can
add from 20 to 100 percent to a policy’s cost.
Some policies may offer "contingent nonforfeiture
benefits upon lapse," a feature that gives policyholders
additional options in the face of a significant increase in
policy premiums. If you do not purchase the optional
nonforfeiture benefit, then a contingent nonforfeiture
benefit is triggered if policy premiums rise by a
specified percentage. For example, if, at age 70, your
premium rises to 40 percent above the original
premium, you have the option of either decreasing the
amount your policy pays per day of care or of converting
to a policy with a shorter duration of benefits.
WAIVER OF PREMIUM
This provision allows you to stop paying premiums
during the time you are receiving benefits. Read the
policy carefully to see if there are any restrictions on
this provision, such as a requirement to be in a
nursing home for any length of time (90 days is a
typical requirement) or receiving home health care
before premiums are waived.
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What else should I know
before I buy?
Virtually all policies now cover Alzheimer’s disease
and no longer require a hospital stay before paying
nursing home benefits. Different options are available
under different policies. These are
ELIGIBILITY
If you are in reasonably good health and can take care
of yourself and if you are between the ages of 18 and
84, you can probably buy long-term care insurance.
Some companies do not sell individual policies to
people under age 18 or over age 84. Age limitations
apply only to your age at the time of purchase, not at
the time you use the benefits.
DURATION OR DOLLAR LIMITATIONS OF
BENEFITS
Long-term care policies generally limit benefits to a
maximum dollar amount or a maximum number of
days and may have separate benefit limits for nursing
home, assisted living facility, and home health care
within the same policy. For example, a policy may
offer $100 per day up to five years of nursing home
coverage (many policies now offer lifetime nursing
home coverage) and only up to $80 per day up to five
years of assisted living and home health care coverage.
Generally, there are two ways a company defines a
policy’s maximum benefit period. Under one
definition, a policy may offer a one-time maximum
benefit period. A policy with five years of nursing
home coverage, issued by a company using this
definition, would pay only for a total of five years in a
policyholder’s lifetime.
Other policies offer a maximum benefit period for
each “period of disability.” A policy with a five-year
maximum benefit period would cover more than one
nursing home stay lasting up to five years each if the
periods of disability were separated by six months or
more.
– or a guaranteed right to increase benefit levels
periodically without providing evidence of
insurability.
• An “outline of coverage” that describes in detail the
policy’s benefits, limitations, and exclusions, and also
allows you to compare it with others. A long-term
care insurance shopper’s guide that helps you decide
whether long-term care insurance is appropriate for
you. Your company or agent should provide both of
these.
• A guarantee that the policy cannot be canceled,
nonrenewed, or otherwise terminated because you
get older or suffer deterioration in physical or mental
health.
• The right to return the policy for any reason within
30 days after you have purchased the policy and to
receive a premium refund.
• No requirement that policyholders:
– first be hospitalized in order to receive nursing
home benefits or home health care benefits,
– first receive skilled nursing home care before
receiving intermediate or custodial nursing home
care,
– first receive nursing home care before receiving
benefits for home health care.
Before you buy
Insurance policies are legal contracts. Read and
compare the policies you are considering before you
buy, and make sure you understand all of the
provisions. Marketing or sales literature is no
substitute for the actual policy. Read the policy itself
before you buy.
Discuss the policies you are considering with people
whose opinions you respect—perhaps your doctor,
financial advisor, your children, or an informed friend
or relative.
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DISCLOSURE
Your medical history is very important because the
insurance company uses the information you provide
on your application to assess your eligibility for
coverage. The application must be accurate and
complete. If it is not, the insurance company may be
within its rights to deny coverage when you file a
claim. In fact, many companies now waive the
preexisting condition requirement if you fully disclose
your medical history and are issued a policy.
What about switching policies?
New long-term care insurance policies may have more
favorable provisions than older policies. Newer
policies, for instance, generally do not require prior
hospital stays or certain levels of care before benefits
begin. But, if you do switch, preexisting condition
exclusions for specified periods of time will have to
begin again. In addition, your new premiums may be
higher because they will be based on your current age.
You should never switch policies before making sure
the new policy is better than the one you already
have. And you should never drop an old policy before
making sure the new one is in force.
What should I look for in a policy?
The National Association of Insurance Commissioners
has developed standards that protect consumers. You
should look for a policy that includes
• At least one year of nursing home or home health
care coverage, including intermediate and custodial
care. Nursing home or home health care benefits
should not be limited primarily to skilled care.
• Coverage for Alzheimer’s disease, if the policyholder
develops it after purchasing the policy.
• An inflation protection option. The policy should
offer a choice among:
– automatically increasing the initial benefit level on
an annual basis,
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5. Does the policy have a maximum length of
coverage for each period of confinement? If so,
what is it for nursing home care? For home health
care? For an assisted living facility?
6. How long must I wait before preexisting
conditions are covered?
7. How many days must I wait before benefits begin
for nursing home care? For home health care? For
an assisted living facility? Other?
8. Are Alzheimer’s disease and other organic mental
and nervous disorders covered?
9. Does this policy require: An assessment of
activities of daily living? An assessment of
cognitive impairment? Physician certification of
need? A prior hospital stay for nursing home care?
Home health care? A prior nursing home stay for
home health care coverage? Other?
10. Is the policy guaranteed renewable?
11. What is the age range for enrollment?
12. Is there a waiver-of-premium provision for
nursing home care? For home health care?
13. How long must I be confined before premiums
are waived?
14. Does the policy have a nonforfeiture benefit?
15. Does the policy offer an inflation adjustment
feature? If so, what is the rate of increase? How
often is it applied? For how long? Is there an
additional cost?
16. What does the policy cost?
- Per year?
• With inflation feature
• Without inflation feature
• With nonforfeiture feature
• Without nonforfeiture feature
- Per month?
• With inflation feature
• Without inflation feature
• With nonforfeiture feature
• Without nonforfeiture feature
17. Is there a 30-day free look?
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Ask for the insurance company’s financial rating and
for a summary of each policy’s benefits or an outline
of coverage. (Ratings result from analyses of a
company’s financial records.) Good agents and good
insurance companies want you to know what you are
buying.
And bear in mind: Even after you buy a policy, if you
find that it does not meet your needs you generally
have 30 days to return the policy and get your money
back. This is called the “free look” period.
Don’t give in to high-pressure sales tactics. Don’t be
afraid to ask your insurance agent to explain anything
that is unclear. If you are not satisfied with an agent’s
answers, ask for someone to contact in the company
itself. Call your state insurance department if you are
not satisfied with the answers you get from the agent
or from company representatives.
Long-term care policy checklist
Before you begin shopping, you should find out how
much nursing home or home health care costs in your
area today. If you needed care right away could you
find it locally or would you have to go to another,
potentially more expensive area? Once you’ve done
some research, you can use the following checklist to
help you compare policies you may be considering.
1. What services are covered?
• Nursing home care
• Home health care
• Assisted living facility
• Adult daycare
• Alternate care
• Respite care
• Other
2. How much does the policy pay per day for
nursing home care? For home health care? For an
assisted living facility? For adult daycare? For
alternate care? For respite care? Other?
3. How long will benefits last in a nursing home? At
home? In an assisted living facility? Other?
4. Does the policy have a maximum lifetime benefit?
If so, what is it for nursing home care? For home
health care? For an assisted living facility? Other?
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HIPAA’s impact on long-term
care insurance
The Health Insurance Portability and Accountability
Act of 1996 (HIPAA) affects how premiums and
benefits are taxed and offers consumer protection
standards for long-term care insurance. The following
are answers to commonly asked questions about
HIPAA.
Tax treatment
Q. What is tax clarification for private long-term care
insurance and why is it necessary?
A. The clarifications assure that, like major medical
coverage, benefits from qualified long-term care
insurance plans generally are not taxed. Without
HIPAA clarifications, these benefits might be
considered taxable income.
Q. Will consumers be able to take a tax deduction for
the premiums they pay on a tax-qualified longterm
care insurance policy? Can consumers deduct
from their taxes costs associated with receiving
long-term care?
A. The answer to both questions is “yes.” HIPAA says
that qualified long-term care insurance will now
receive the same tax treatment as accident and
health insurance. That means that premiums for
long-term care insurance, as well as consumers’
out-of-pocket expenses for long-term care, can be
applied toward meeting the federal tax codes’ 7.5
percent floor for medical expense deductions.
However, there are limits, based on a policyholder’s
age, for the total amount of long-term care
premiums that can be applied toward the 7.5
percent minimum. (Check with your financial
planner or tax adviser to see if you are eligible to
take this deduction.)
Q. Will employers be able to deduct anything for the
cost of providing or paying for qualified long-term
care insurance for their employees?
A. Generally, employers will be able to deduct, as a
business expense, both the cost of setting up a
long-term care insurance plan for their employees
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and the contributions that they may make toward
paying for the cost of premiums.
Q. Will employer contributions be excluded from the
taxable income of employees?
A. Yes.
Q. Can Individual Retirement Accounts (IRAs) and
401k funds be used to purchase private long-term
care insurance?
A. No. However, under a demonstration project, taxfree
funds deposited in Medical Savings Accounts
can be used to pay long-term care insurance
premiums.
Consumer protection standards
Q: What is the connection between consumer
protection standards and tax treatment of longterm
care plans?
A. To qualify for favorable tax treatment, a long-term
care policy sold after 1996 must contain the
consumer protection standards spelled out in
HIPAA. Also, insurance companies must follow
certain administrative and marketing practices or
face significant fines. Generally speaking, policies
sold prior to January 1, 1997, automatically will be
eligible for favorable tax treatment. Lastly, nothing
in the new law prevents states from imposing more
stringent consumer protection standards.
Q: What kinds of consumer protections must
insurance companies employ to meet HIPAA
standards?
A: There are several. Consumers must receive a
“Shopper’s Guide” and a description of the policy’s
benefits and limitations (i.e., Outline of Coverage)
early in the sales process. The Outline of Coverage
allows consumers to compare policies from
different companies. Companies must report
annually the number of claims denied and
information on policy replacements and
terminations. Sales practices such as “twisting”—
knowingly making misleading or incomplete
comparisons of policies—are prohibited, as are
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high-pressure sales tactics.
Q. Do the HIPAA standards address limits on
benefits and exclusions from coverage?
A: Yes. According to HIPAA, no policy can be sold as
a long-term care insurance policy if it limits or
excludes coverage by type of treatment, medical
condition, or accident. However, there are several
exceptions to this rule. For example, policies
may limit or exclude coverage for preexisting
conditions or diseases, mental or nervous disorders
(but not Alzheimer’s), or alcoholism or drug
addiction. A policy cannot, however, exclude
coverage for preexisting conditions for more than
six months after the effective date of coverage.
Q: What will prevent a company from canceling my
policy when I need it?
A: The law prohibits a company from not renewing a
policy except for nonpayment of premiums.
Policies cannot be canceled because of age or
deterioration of mental or physical health. In fact,
if a policyholder is late paying a premium, the
policy can be reinstated up to five months later if
the reason for nonpayment is shown to be
cognitive impairment.
Q. Will these standards help people who, for
whatever reason, lose their group coverage?
A: They will. People covered by a group policy will be
allowed
to continue their coverage when they leave their
employer, so long as they pay their premiums in a
timely fashion. Further, an individual who has
been covered under a group plan for
at least six months may convert to an individual
policy if and when the group plan is discontinued.
The individual may do so without providing
evidence of insurability.
18
If you need help
Every state has a Department of Insurance that
regulates insurers and assists consumers. If you need
more information or if you want to register a
complaint, check the government listings in your
local phone book for your State’s Department
of Insurance.
Additional information about long-term care is
available from the Area Agency on Aging.
For your local office, call 1-800-677-1116.
Other sources include:
American Health Care Association
1201 L Street, NW
Washington, D.C. 20005
(202) 842-4444
www.ahca.org
National Association of Insurance Commissioners
2301 McGee Street, Suite 800
Kansas City, MO 64108
(816) 842-3600
www.naic.org
National Council on the Aging
300 D Street, SW, Suite 801
Washington, DC 20024
(202) 479-1200
www.ncoa.org
University of Minnesota Extension Service
www.financinglongtermcare.umn.edu
20
For more information
• You can find AHIP online at www.ahip.org. This
site offers additional consumer information about
long-term care insurance and other insurance
coverage.
• To find a long-term care insurance agent or
financial adviser near you who has earned the
Long-Term Care Professional (LTCP) designation,
call AHIP’s Insurance Education Program at
202-778-8471.
Although frequently revised, this booklet
contains information that is subject to changing
federal and state law. AHIP provides this booklet
for guidance only; it is not a substitute for the
advice of licensed insurance professionals and
legal counsel.
© Revised edition, 2003, 2004
America’s Health Insurance Plans, Washington, D.C.
Reviewed by Cooperative State Research, Education, and Extension Service,
U.S. Department of Agriculture, in cooperation with long-term care insurance
experts Mary Ellen Rider, Ph.D., Extension Specialist, Consumer Health Policy,
University of Nebraska-Lincoln; Marlene Stum, Ph.D., Family Resource
Management Specialist, University of Minnesota; and Paul McNamara, Ph.D.,
University of Illinois.