The core components of any long term care insurance policy include: daily benefit amount, benefit period, elimination period, and inflation protection. These four components are what will determine your rates and any increase or reduction in premium.
Component #1: Daily Benefit Amount.
This is the maximum amount your insurance company will pay per day for your care once you become eligible to receive benefits. This amount is available to you whether you receive care at home or in a nursing home.
Component #2: Benefit Period.
This component determines the length of time your insurance company will provide benefits. The combination of the daily benefit and the benefit period make up the “benefit pool.” The benefit pool can be calculated by multiplying the daily benefit by the benefit period. (i.e. a $200 daily benefit with a 3-year (1,095 days) benefit period would have a benefit pool of $219,000.) It is typically wise to purchase a policy with a minimum of a three year benefit period.
Component #3: Elimination period (or waiting period).
The elimination period is the amount of time an individual will be required to wait prior to receiving benefits from their policy. The elimination period may be 30, 60, 90, 180, or even 365 days. The elimination period is much like a deductible. It is the amount of time that you will be responsible for paying your own expenses, before your policy kicks in.
Component #4: Inflation protection.
This is quite possibly the most important part of long term planning. Inflation protection allows the policy to keep up with increases in the cost of long term care. For example, if the cost of care today is $200 per day, the cost of care in 30 years will be closer than $850 per day.
Additional Features and Benefits: Each LTC insurance policy is unique and some carriers offer additional options such as:
Zero Day Home Health Care Elimination Period. This option may waives the elimination period for home health care if the individual has been certified by a license professional as being eligible.
Survivorship Benefit or Waiver of Premium: If you and your spouse purchase coverage at the same time, from the same company, with the same benefits, this policy will waive the premiums if one insured passes away or if one spouse/partner begins to receive care.