This summer, Frank Anania from Mesa, Arizona, reached out to A Place for Mom with what at first glance, seemed like a simple question. “My wife is in memory care. Our insurance which pays $200.00 dollars per day for nursing care will only pay $100.00 per day for memory care. Memory care requires more daily care. What can I do?” he asked.
With no simple solution at hand, it turns out that Frank, like many other Americans, isn’t able to rely on his insurance coverage when he needs it the most. Experts have been recommending additional insurance coverage like long term care policies to cover the financial gaps that many seniors face when it comes to paying for their care. But what happens when these policies don’t fill the gap as they were intended to?
Differences Between Memory Care and Nursing Care Costs
According to Steven M. Dunn, an attorney who specializes in long term insurance claims in the state of Florida and beyond, many seniors are finding themselves in the same boat as Frank — unclear whether the coverage they’ve paid into actually denies or includes coverage because of a confusing claims process.
In the past 11 years, Dunn has successfully handled in excess of 600 long term care insurance cases and has seen a variety of different circumstances in which coverage was denied, eliminated or was not the type of coverage the senior thought they had purchased.
Part of the disconnect is that the insurance policies are difficult to understand and the fine print is often restrictive. For seniors, the biggest pitfalls “are trying to read and understand the contract themselves and trying to navigate through the claims process,” Dunn explains. “I can tell you most policies do not offer enough coverage to cover a skilled nursing home, which creates a lot of pressure on the insured and family in terms of the options they have.”
Coverage for Care, but Not the Right Type of Care
According to Dunn, the language used in the insurance policies surrounding the type of care facility that is covered can be problematic. For example, he has handled cases where the claimant had coverage for home care and tried to use the home care coverage to cover their assisted living costs. The insurance company denied the claim, saying the assisted living community was not the person’s home. Dunn was able to win the case by arguing that it was indeed the person’s home and that therefore, the coverage should be given.
“It is a two-fold problem,” Dunn says. “Most of the people who I encounter don’t need to be in a nursing home, but have nursing home only policies. Do they go to a nursing home just to get coverage or try to get into a facility that is more suitable to their needs and forgo coverage?”
People should ask questions when purchasing long term care insurance that only covers care in a nursing home, or a policy with coverage in a nursing home and a lower level of care that is offered at different amounts. “The policies generally establish a certain definition of a nursing home. So what I’ve been able to do is prove that an assisted living community meets the definition of nursing home only coverage,” Dunn says. “My argument has consistently been why force people into the most restrictive environment? They should be able to go into the least restrictive environment suitable for their needs. If their nursing home coverage only includes skilled care, and they only need unskilled care, why can’t they get coverage for that unskilled care in an assisted living community?”
For seniors with coverage that is the wrong type of coverage for their needs, hiring an attorney like Dunn to handle their claim is a good option. Although circumstances vary by individual and jurisdiction, challenging the insurance company’s decision doesn’t necessarily mean a lengthy or expensive court battle. “In Florida there is a statue that allows a person’s case to be accelerated if they are elderly,” Dunn says, adding that “the courts seem to want to take care of seniors.”
Problems Navigating the Claims Process
For some seniors, navigating the claims process is a serious hurdle. According to Dunn, there are a number of potential problems that seniors face when filing an insurance claim, including:
- Not getting the right documentation
- Not understanding the questions being asked by the insurance company
- Not understanding the questions being asked by the person doing the medical assessment
- Not understanding how to answer questions
All these factors filter through to the decision makers, and often seniors inadvertently provide the wrong information which can compromise their claim. “People should know in advance it’s not a simple process,” Dunn warns. “It involves assessments, plans of care, medical records and documentation, and doctors chiming in to better clarify a person’s condition, especially regarding cognitive impairment.”
Understanding Your Policy
Despite these problems, Dunn isn’t against long term care insurance. He believes it’s “an option that should be considered with estate planning — the cost of care is quite high and it is a way to hedge those costs,” he says, “especially considering that people are living longer than they expected and chronic care is expensive.”
The problem, is that “people listen to their agents and brokers and they do not understand the policy and sometimes the insurance companies don’t understand their own contracts,” Dunn warns.
“I know that because in the cases I’ve had the insurance companies have been forced to administer their policy differently than they had intended. For anything that is important enough to buy that will protect against a loss people should know what they are buying.”
Relying on Your Insurance Agent or Broker
Your insurance broker or agent plays a critical role in helping you choose the right insurance and understand the details of your coverage. As with every profession, some insurance agents are better than others, so it becomes very important for people to properly vet their insurance representative.
Peter B. Codner, a representative with Primerica, a United States-based insurance and financial services company, suggests that people choose a representative who is willing to work with them step-by-step to ensure that their long-term financial needs are covered. According to Codner, there are red flags that may tell you your insurance agent doesn’t have your best interests at heart. “People should beware of an insurance agent who only seems concerned with getting the policy signed,” he warns.
Although many people purchase a policy and then don’t hear from their agent or broker again, Codner says that your agent should develop a long-standing relationship with you.
“Your insurance agent should follow up with you throughout the life of your policy,” Codner explains. “Can you get a hold of them to ask questions? Are they educating you about your coverage and adequately answering questions about the details and fine print? Are they trying to sell you more than you need?” Codner asks.
Stuart Furman, ESQ., an elder law attorney in California and author of the “ElderCare Ready Book“ and award winning “ElderCare Ready Pack,” suggests that people “look for a good insurance company with a good pay history.” Your insurance agent should be able to provide information about the company’s pay history.
When it comes to choosing the right insurance policy, there are a number of factors that people should consider:
- If you’re looking at a policy with limitations in where or how it can be used, explore those details — look at it carefully to see if you can make it work no matter which type of care you need.
- If you can afford it, try to get comprehensive coverage that will include community based and home care (including adult day care, assisted living, home care and nursing home care).
- Daily benefit amounts (the amount of money that will be paid per day for your care choice) should be as high as you can afford.
- Understand the elimination period (which is like a deductible). A standard elimination period is 90 days, which means you’ll have to pay for care out of your own pocket for the first 90 days.
- Consider whether the policy has an inflation benefit that will increase the daily benefit amount with inflation factors to hedge against the cost of inflation over time.
- Is a hybrid policy a good approach for you? These are life insurance policies which have a home care/long-term care element where people can access their life insurance reserves for long term care if needed.
- Does the policy provide coverage for your lifetime or for a shorter duration (up to a certain age)?
- How many deficits in life (mobility restrictions, personal hygiene assistance, etc…) are needed for the policy to kick in?
- Review your existing policy every 5 years or so. If there is a gap in your coverage the time to address that and increase coverage or additional planning is before an illness.
Ultimately, if you’re relying on an insurance policy to help you cover your senior care needs then it’s important to:
- Ensure that the coverage is adequate for the type of care you expect you’ll need
- Know how to navigate the claims process
- Understand the details of your policy and the type and amount of coverage it provides
“If people have questions or don’t understand they should ask people who know. Don’t buy something unless you know what you’re buying and don’t initiate a process you’re unfamiliar with without professional help,” Dunn advises. “If at any point in the process you’re unsure or you need help then don’t be afraid to reach out to an attorney. I think a lot of people just accept what the insurance company says is true and they give up. It’s a big problem,” Dunn says. “If something doesn’t feel right ask and don’t give up.”
What questions do you have about the cost difference between memory care and nursing care? Share them with us in the comments below.