Long term care insurance is not a new concept. It has been a viable option that can offer a few available mechanisms for individuals to protect themselves against the catastrophic costs of long term care and could potentially provide coverage for millions of Americans from catastrophic long term care costs. It allows insurance policies pay a daily maximum amount for covered services. Basically, when you buy a policy, you decide the value of the daily maximum amount and the length of time your benefits will continue.
The current frame work from which (LTC) has been established however, contains several flaws and certain requirements should be reconsidered that could encourage the purchase of (LTC) coverage.
The first is the requirement to receive benefits years after purchasing and consistently pay for premiums over a long period of time. The need to pay for these premiums over a long period of time may create a situation of lapse coverage and a deterrent to purchase (LTC) insurance. A revised approach to existing (LTC) insurance plans should allow for a reimbursement of premiums paid up to 50% of the existing balance of premiums paid. This incentive will create a partnership between the insurance carrier and the insured creating program flexibility providing a sense of comfort to the insured that all is not lost if the insured can no longer afford to continue paying the premiums.
Second requirement is the eligibility that favors group purchasing of LTC insurance that extends discounts to group plans and not to individuals. While underwriting is standard in the individual LTC insurance industry, group plans are made more accessible because applicants are guaranteed issue and allowed short form underwriting that does not include detailed medical history questions. Even without contribution from the employer, long-term care insurance through the workplace can give employees the advantages of group insurance over individual policies (Fundamentals of Employee Benefit Programs, fifth edition, 1997, p.304.)
The third flaw is the lack of legislation that should impose mandatory payments of LTC insurance for employees over 50 years of age to all employers. Unlike the passage of the Long Term Care Security Act (Public Law 106-265) which limits plan participation to federal employees only and making it the largest employer based LTC sponsored program in the nation, a national program legislated into law is required to address the long term care needs of all the elderly when the placement to a nursing home decision occurs can defer expensive premiums paid by individuals. (To be continued….) However, your thoughts at this point?