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There are various Long Term Care Insurance Policies. The most popular are the “Indemnity” or “Expense Incurred” where you choose the benefit amount. A fixed benefit amount is paid by an “indemnity” or “per diem” policy regardless of what you spend. The actual expenses for services received up to a fixed dollar amount per day, week, or month is reimbursed with an “indemnity” or “per diem” policy.

“Integrated Policies” or policies with “Pooled Benefits” pay a total dollar amount which may be used for different kinds of long term care services used. There is usually a daily, weekly, or monthly dollar limit for long term care expenses covered by this kind of policy. For example you buy a policy with a maximum benefit amount of $300,000 of pooled benefits. You will have, with this policy a maximum daily benefit of $300 that would last for 1,000 days if you spend the maximum daily amount on care. If your care costs less than the maximum daily amount of $300 you will receive benefits for more than 1,000 days.

Long Care Insurance Policies can be divided into three broad categories according to where benefits are paid - Home Care Only, Nursing Home and Residential Care Facility Only and Comprehensive. Care in your own home or a community setting is covered by Home Care Only policies. This kind of policy pays for expenses rising out of home health, adult day health care, hospice, respite care, personal care and homemaker services.

Assisted living care provided in nursing home or any place that provides assisted living care as long as this place is licensed as a Residential Care Facility for the Elderly (RCFE) is covered by Nursing Home and Residential Care Facility Only policies. Room and board in these facilities are not the only services covered by these kinds of policies. Expenses of all long term care services you receive in either of these facilities is covered by this policy up to the policy’s maximum daily benefit amount.

Some of the RCFE include small neighborhood homes also called board and care facilities, retirement homes and specialized community facilities for patients with cognitive impairment (dementia) from Alzheimer. In this kind of policy, the assisted living benefits must equal to at least 70% of the nursing home care benefit.

The Comprehensive Long Term Care Insurance Policies cover costs rising out of care in a nursing home, assisted living facility, home care and community care (adult day care). LTC Comprehensive policies sold by different companies require different criteria to be met before benefits can be paid. When you are unable to perform two activities of daily living (such as bathing, using the bathroom, dressing eating etc.) or you have a cognitive condition that requires supervision, Comprehensive Long Term Care Insurance Policy will pay you the benefits. Whether care is provided in a nursing home, at your own home or in an assisted living facility the criteria required for the benefits remains as described above.

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The type of Long Term Care Insurance Policy chosen, daily benefit amount to be paid, your age, number of years the policy will pay benefits, choice of inflation protection and the number of days after you qualify for the benefits before the company will start to pay benefits are factors which influence your Long Term Care Insurance Policy Premium. If you have a pre-existing condition, your premiums may be higher if some companies agree to insure you. All of the above factors influence your LTCI policy premium.

Various LTCI companies calculate the cost of benefits you choose in a varying manner. This reason alone can make a significant difference between premiums for similar benefits. For instance, a company calculates the premium based on every $10 of the daily benefit you choose. If for each $10 of daily benefit the company charged $95, the premium would be $950 per year for a daily benefit of $100. With a similar package of benefits costing $150 with another company, the premium would rise to $1500.

The method and amount of inflation protection chosen will also influence your LTCI premium. For those in their 40s and 50s not expecting to need care for several years this nearly doubles their cost. Your probability of developing health conditions which make you ineligible to apply for new benefits increases with age but your ability to change LTCI policy diminishes as you age.

You may see an increase in your LTCI premiums over the years. A personal worksheet which explains the rate increases the company has had since 1990 is provided to you by your agent when you buy a LTCI policy. For rate increases for every company that sells go to the California Department of Insurance website. LTC insurance companies found it difficult to increase future premiums when California passed legislation in 2000.

When it became mandatory in 2006 for all companies filing for premium increases over a certain amount to offer a choice, policy holders got to choose between stop paying their premium and keep the benefits equal to the total amount of premiums already paid. The sum of premiums that has already been paid will finance only a small amount of care. If you were unable to pay because of a premium increase, you will not lose all your benefits.

Talk with your company for lower premiums by reducing some of your policy benefits. Your local Health Insurance Counseling and Advocacy Program (HICAP) office can help you if you have received a premium increase notice or you need to lower your premium.

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Expenses resulting from long term care services are paid by Long Term Care Insurance. When you have a physical disability or cognitive impairment daily activities like eating, bathing, dressing and using the bathroom etc. become difficult and help with such activities is called Long Term Care. Medicare, Medicaid and traditional health insurance do not pay for such care. Such care is not received in a hospital nor is it intended to cure you. You may need this kind of care for the rest of your life and you may choose to receive it in your own home, a nursing home or assisted living facilities.

Health services for those who are 65 or older is provided by Medicare which is a Federal Health Insurance program. Those who are under 65 but have certain disabilities, and those dealing with end stage renal disease requiring dialysis or a transplant are also covered by Medicare. Those suffering from ALS or Lou Gehrig’s disease are also eligible for Medicare. Only specific short term skilled care such as inpatient hospital stays, inpatient skilled nursing facility stays, hospice care and home health care are paid by Medicare. It also pays for some out patient medical services such as doctor visits, diagnostic tests, preventive care and prescription drugs. For a limited time only specialized care in a hospital is provided by Medicare.

Federal Funds supplement a state based program called Medicaid. In California the Medicaid Program is called Medi-Cal. The poor and impoverished are provided health services by Medicaid according to the state’s guidelines. One must meet the state’s poverty criteria in order to be eligible for Medicaid. Usually this means you need to expend all but $2000 of your assets. Medicaid, a welfare program kicks in only after a person’s assets are gone!

Medigap is a form of private supplemental health insurance policy which increases the amount of health insurance for eligible Medicare recipients. Medigap is provided by private health insurance companies such as Humana, Blue Cross and Blue Shield etc. The 12 standardized Medigap Policies have the same benefits regardless of which private company sells it to you. A part or all of Medicare’s coinsurance and deductibles are paid by Medigap policies. A few Medigap policies cover health care costs which are not covered by Medicare like emergency medical care in foreign countries.

To conclude, Long Term Care Insurance pays for costs resulting from Long Term Care. Invest in a Long Term Care Insurance policy to protect your assets and to safe guard yourself and your family in case you need long term care.

Maria Smith often writes about long term care insurance.