Reimbursement LTCI Policies, Why Not?
Professionals on the field of long term care insurance say most people would wind up buying a reimbursement long term care insurance (LTCI) policy even though in their hearts they prefer the indemnity policy.
That’s because reimbursement policies are more affordable than indemnity policies, say buyers. Little do they know that there’s more to reimbursement policies than just lower premium rates.
With a reimbursement policy the insured individual shall be reimbursed for his total expenses on care up to his maximum daily benefit amount. If the total amount of his LTC expenses happens to be smaller than his policy’s maximum benefit amount, his insurer will put the remainder back into his pool of benefits. Meanwhile, if his total expenses would exceed the overall amount of his daily benefit, he shall be required to pay for the excess as this is no longer covered by his policy.
For example, an individual’s LTCI policy stipulates that his maximum daily benefit is $175 while his total out-of-pocket expenses in a nursing home only totaled to $110. The insured shall then receive only $110 from his policy while the remaining $65 shall be returned to his pool of benefits which he can use in the future.
Now if the incurred expenses of the insured reached $185 he will receive his policy’s maximum daily benefit of $175 and pay the $10 excess using money from his nest egg or other resources.
Many individuals regret buying their reimbursement policies because they feel that they are short-changed by its mode of benefit payout. They realized that they should have gambled for an indemnity policy as it pays one’s daily benefit amount in full regardless of the actual amount of his expenses on care.
What they don’t understand is the fact that a reimbursement policy allows one’s coverage to be extended. This is especially true if the policyholder sledom uses his maximum daily benefit amount whenever he acquires LTC services.
Is a Reimbursement Long Term Care Insurance Policy Right for You?
Before a policyholder can receive his benefits from his reimbursement LTCI policy he is required to submit to his insurer the official receipts and other documents from his health care provider. Upon receiving all the necessary paperwork, the insurer will compute the insured’s overall expenses and after having done so that’s the only time that the insured shall be reimbursed of his LTC expenses.
Reimbursement policies are basically designed for people who plan to receive care in LTC facilities because they require submission of receipts and other types of paperwork. Home health aides don’t issue official receipts so if you’re going to use a reimbursement policy for in-home care you will end up not receiving a single penny from your policy.
Owners of a reimbursement long term care insurance policy may feel short-changed because oftentimes they do not receive the exact amount of their policy’s benefits; especially if their incurred expenses in an LTC facility are always smaller than their insurance benefits.
However, they will find this type of policy advantageous in the long run because once they reach the end of their benefit period they will realize that they still have a big amount of benefits put away and waiting to be put to use.
Are you planning to buy long term care plans? Research various long term care quotes at CompleteLongTermCare.com.
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