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Sunday, April 30, 2017

How To Avoid Long Term Care Insurance Scams

Although they are not as popular as they were a few years ago, long-term care insurance plans are still being sold to many 50 and 60-somethings worried about how they will pay for in-home care or a nursing home stay. Before buying a long-term care plan, or making changes to an existing plan, there are a few things to look out for.

In theory, long-term care plans are great. Hiring an in-home nurse or moving into an assisted living facility can cost upwards of $90,000 per year. A lot of people are not able to afford this sort of care without government assistance. But Medicare doesn’t cover the cost of long-term care. Medicaid does cover long-term care, but in order to qualify for it many seniors must spend down their assets and jump through a variety of bureaucratic hoops.

Long-term care insurance can be a good alternative option, but the plans often cover less than the seller implied, and the premiums can be quite costly.

Be wary of plans that are sold as covering “everything.” Don’t rely on assurances from the seller when making a decision about coverage. Take a look at the fine print and make sure any plan you buy matches your needs and expectations. Some plans only cover a few years of care, or limit the facilities they are willing to do business with.   

Make sure you understand how the premiums are calculated. Are they fixed? Or can the seller increase them in the future? Is there a cap on how much the premium can be increased? Many companies have been increasing the premiums on existing plans because the plan holders are living much longer and requiring more care than predicted. The fact that the policy-holders demanded more long-term care than non-policy-holders should not have been as big a surprise as it has been since people don’t hesitate to use services they feel they have paid for.

Look for a plan that will allow you to get the money you have paid in premiums refunded if you cancel the plan in the future. Canceling a plan is really frustrating because you aren’t going to get the benefits you wanted, and you could have been spending that money elsewhere, so make sure you at least get a refund of premiums paid.  

If a seller is eager to get you to “trade up” to a better plan, be extra careful. Switching plans might mean forfeiting all the premium payments previously made. It is also important to double check that any new plan covers medical conditions that arose while the old plan was in place. Medical issues that developed or worsened while the old plan was in place might not be covered under a new plan because they could be considered pre-existing conditions that the insurer is not obligated to cover.

Long-term care insurance is a great option for many people worried about how they will afford medical care in the future, but like any insurance product, attention to detail is critical, even when dealing with the most reputable companies.



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