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Long-term care coverage pitfalls (cont.)

In our last post, we were talking about long-term care insurance. The insurance has an interesting, and perhaps undeserved, reputation, thanks to headlines about companies pulling out of the business and reports of policyholders' denied or delayed claims. A recent article laid out some ways to ensure a long-term care insurance policy will actually cover the expenses associated with long-term care.

Federal law may come to the rescue for some policyholders who purchased their insurance after 1997. Benefits must be paid under two conditions: 1) when the insured cannot perform two out of six basic "activities of daily living," or 2) when the insured has a cognitive impairment requiring "substantial supervision." Daily living activities include dressing, bathing and the like. Cognitive impairments that could qualify would be a traumatic brain injury or Alzheimer's Disease. According to a long-time agent, just about every policy sold today requires a doctor or nurse to certify that the disability will likely last at least 90 days.

The documentation is required but frequently doesn't meet the insurance company's standards. Inadequate paperwork by the health care professional can lead to a claim being denied or questions. According to some industry insiders, claims can be denied when an assessor visits the policyholder to verify or document the disability.

Why would someone not admit to a disability? One answer is that senior citizens don't want to admit to needing help -- it's an independence issue. An agent tells the story of an elderly man receiving an insurance assessor in his home. The man told the assessor that he was a good driver. The claim was denied. The insurance company reversed its decision after the agent had his client undergo neurological tests that proved a cognitive disability.

We'll finish up in our next post.

Source: Wall Street Journal, "The Latest Long-Term-Care Snafu," Anne Tergeson, 01/22/11

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