Services covered. Long-term care policies differ in their coverage of a number of services – including nursing home care, home health care, personal care at home, assisted living facility care, and adult day center care. Policies also differ in the ways they cover these services. For example, a policy may pay only for home care from licensed home health agencies or it may pay for other licensed health care providers, such as practical nurses and home health care aides.
Types of facilities covered. Again policies vary as to what facilities are covered. Some may pay for care in any state-licensed facility; others limit the kinds of facilities they cover.
Exclusions and limitations. In addition to other exclusions, most long-term care policies do not cover mental or nervous disorders other than Alzheimer's disease or dementia.
Amount of coverage. Your policy will state the amount of coverage in terms of the maximum benefit in years or the maximum benefit in dollar amount. Policies with longer maximum benefit periods cost more. Policies generally pay given amounts of benefits by the day, week, or month. When considering these benefit amounts, find out how much nursing and assisted living facilities, and home health care agencies charge for services in the area where you think you will retire.
Eligibility for benefits. Long-term care insurance companies use "benefit triggers" to determine when to pay benefits. The most common benefit trigger is the inability to perform activities of daily living (ADLs), such as bathing, continence, dressing, eating, toileting, and transferring. Generally, a policy pays benefits when one cannot perform a given number of ADLs. In choosing a policy, examine how it defines the inability to perform a task.
An important additional trigger is cognitive impairment or mental incapacity. The inclusion of this trigger gives greater assurance that cases of Alzheimer's disease will be covered.
When benefits start. Most policies have an elimination period before benefits will be paid for long-term care. If you choose a short elimination period, the policy will be more expensive. If you choose a longer period, you will have lower premiums, but will have to bear the costs of care during the elimination period. Another consideration is whether a policy considers a second stay as part of the first stay or requires another elimination period.
Inflation protection. Because of the rising costs of long-term care, inflation protection, whether automatic or periodic, is critical. Inflation protection can be a simple inflation adjustment which results in the addition of the same amount each year or a compound adjustment which increases in amount each year, adding to the ultimate amount of the benefit.
Additional benefits and options. Be sure to ask the insurance company about other benefits and options, such as a non-forfeiture benefit, which assures that you will receive some value for the money paid into the policy in the event you drop your coverage.