NEWS RELEASE
Pearl W. Stanley, CFCS
County Extension Agent
Family and Consumer Education
Bolivia, NC 28422
February 15, 2001
Choosing a long-term care insurance policy requires serious decision-making on the part of the buyer. The Seniors' Health Insurance Information Program (SHIIP), a division of the North Carolina Department of Insurance, receives many questions regarding the purchase of long-term care insurance. Such examples include: What daily benefit should I consider? How long do my policy benefits last? When do I want my policy benefits to begin? Are the policy benefits going to cover my long-term care expenses in full?
A primary consideration in a long term-care insurance policy is the daily benefit amount. The daily benefit amount is the amount of insurance benefit in dollars received per day to cover qualified expenses. The location of long-term care services is an important part of choosing a daily benefit amount, because the average facility cost may differ in various parts of the country. For example, in North Carolina, the average facility cost may be $130 per day. However, the cost in California may be $160 per day. Take this into consideration in choosing a daily benefit amount.
Next, look at the long-term care insurance policy maximum benefit period, which is the time the policy will pay. The maximum benefit period may last one, two, three or five years or an unlimited amount of time. Statistics show that nursing facility stays average two years; however, there are certain health conditions such as Alzheimer's and Parkinson's diseases that could require a longer stay in a facility. There is a higher cost for policies with longer benefit periods.
An important choice to make in evaluating a long-term care insurance policy is the elimination period. The elimination period is the length of time the individual must pay for covered services before the insurance company will begin to make payments. The longer the elimination period in a policy lasts, the lower the premium. Total out-of-pocket costs must be taken into consideration when choosing a long elimination period. A policy with a 30-day elimination period and a daily care cost of $130, will result in out-of-pocket expense for care during those 30 days of $3,900.
Another consideration for long-term care insurance policies is inflation protection. The inflation protection provision increases the daily benefit amount to keep pace with inflation. For example, in 2001, when the policy was purchased, the daily benefit amount of $130 would be sufficient to cover the average daily cost. But, in 2005, when the plan benefits go into effect, the average daily facility cost may have risen to $160. Without inflation protection, the individual would then be responsible for the $30 per day difference toward the cost of care. The inflation protection option would increase the daily benefit amount paid.
Daily benefit amounts, length of policy benefits, elimination periods, and inflation protection benefits are afford ability factors that affect the price of your long-term care insurance policy premium. Investigate all options when choosing a policy.
"SHIIP staff and volunteers understand that long-term care insurance benefits can be very confusing," said Insurance Commissioner Jim Long. "Our SHIIP counselors are here to help you with any questions regarding long-term care insurance and Medicare."
SHIIP's Toll Free consumer line (1-800-443-9354) is available Monday through Friday from 8 a.m. to 5 p.m., or beneficiaries can visit the Web site at www.ncshiip.com. to find the answers to Medicare beneficiaries' questions. SHIIP also has trained volunteers in all 100 counties of North Carolina for one-on-one counseling sessions. To reach a SHIIP volunteer counselor in your area, contact: Mrs. Pearl Stanley, CFCS, County Extension Agent, Family and Consumer Education, at the Brunswick County Center of the North Carolina Cooperative Extension Service in Bolivia, Telephone: (910) 253-2610. The Seniors' Consumer Column is written monthly by the SHIIP staff. The column is a service of SHIIP, which is a division of the North Carolina Department of Insurance -- Jim Long, Commissioner. P. O. Box 26387, Raleigh, NC 27611, 1-800-443-9354, (919) 733-0111
Please e-mail Pearl Stanley, CFCS, County Extension Agent, Family and Consumer Education for further information or assistance.
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Date Created 3/2/2001