Wednesday, October 3, 2018

Phrasing: An LTCi story

Recently, I had an interesting Twitter conversation about Long Term Care insurance. It all started when our friend Allison Bell tweeted:

"While a lot of insurers are hiding from stand-alone long-term care insurance... National Guardian Life is out there getting its product Partnership program approvals."

[ed: Partnership-compliant plans have special powers]

I replied:

"Good for them! Challenge: They still use Service Days for Elimination Period."

And that's when things got interesting.

A Twitter friend responded "Educate us please... What is that, and why bad?"

So I explained:

"Long Term Care insurance (LTCi) plans have a "deductible" in the form of waiting periods until benefits begin. Some (most?) are based on *calendar* days; that is, I've been eligible for benefits for 90 days now, go ahead and send those checks.

NGL, though, uses service days; that is "I've been eligible for benefits for 90 days, but have only had care for 60 of those, so I still have 30 more days receiving care before I'm eligible.

It's not good/bad, just different, but I much prefer calendar to service. Often get benefits much quicker."

Our friend Scott Olson (a recognized LTCi guru) chimed in:

"My relative had a home health aide come to the house everyday for 90 days... just a short visit of a few hours. That satisfied the service day elimination period in only 90 calendar days and it didn't cost much."

I replied that I had nothing against service day plans, but that I preferred calendar-based ones. I then pointed out that home health care is not free; around here, it runs about $20 an hour. Based on a 90 day elimination period (by far the most popular option), that would cost about $3,600 just to access the claims process.

Scott agreed, but suggested that this could be offset by lower premiums on service day plans. My experience has been that this is rare (I've actually never seen it happen 'in real life.'). Still, worth considering.

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