LONG TERM CARE LONG TERM CARE INSURANCEINSURANCE

What you should look for when purchasing long term care insurance

Why Long Term Care Insurance?Why Long Term Care Insurance?• LTCI covers care provided outside of hospitals,

for chronic conditions • Health insurance does not cover LTC• Medicare does not cover LTC• Medicaid does, but only for impoverished

individuals (more about Partnership policies later)

What should you consider?What should you consider?• How likely are you to need long term care?• Are caregivers available?• What is the cost of care in your area?• Can you afford premiums for long term care

insurance over the long term?• Is it a tax qualified or non-tax qualified policy?• Does offered policy meet your needs?

Outline of CoverageOutline of Coverage• Premium Issues

– Renewability– Waiver of premium– Insurer’s right to change premium– Free look

Outline of CoverageOutline of Coverage• Benefits

– Covered services including deductibles, waiting periods, elimination periods and benefit maximums

– Institutional benefits by skill level– Non-institutional benefits by skill level– Eligibility for Payment of Benefits (benefit triggers)– Limitations and exclusions

Personal WorksheetPersonal Worksheet• Designed to determine financial suitability

– Discloses insurer’s right to raise premiums– Insurer’s rate increase history

• Discloses insurer’s rate increase history• Agent must ask applicant to complete

– Income/asset questions– Inflation protection/Elimination period questions

• Completion is voluntary but important– Insurer may not complete sale without the information

Rate Increase Disclosure FormRate Increase Disclosure Form• Rate schedule• Potential rate revisions• Options in the event of a rate increase

– Continue policy– Reduce policy benefits– Exercise nonforfeiture option– Exercise contingent nonforfeiture option

Contingent NonforfeitureContingent Nonforfeiture• Is available if cumulative premium increase

exceeds specified amount• Varies by age, i.e. % is 90% for issue ages 55-

59, 20% for issue age 80• Provides paid up policy benefit• CNF Benefit is the total amount paid in

premiums before CNF exercised

Long Term Care Insurance Long Term Care Insurance Partnership (LTC-P)Partnership (LTC-P)

• What is Asset Disregard? • How does it work?

– Insured purchases a policy with $100 daily room benefit, 2 year benefit period

– Insured enters Assisted Living Facility (a covered facility), stays for 2 years

– Policy pays $ 73,000 in benefits

– Insured applies for SoonerCare– All SoonerCare eligibility criteria apply, except that

$73,000 of assets that would ordinarily be counted are disregarded

– Insured retains $73,000 that would ordinarily have to be spent down

• For more information:

www.okltcpartnership.com

LTC Partnership RequirementsLTC Partnership Requirements• Insured must be an Oklahoma resident (or resident of

another Partnership state) when coverage first becomes effective

• Policy must:– be tax-qualified and issued no earlier than July 1, 2008– comply with current Oklahoma law and NAIC Model

requirements– include inflation protection

• Insurer must comply with reporting requirements

LTC-P Inflation Protection LTC-P Inflation Protection Requirements Requirements

• Insured less than 61 at time of purchase, 3% per year compounded annually, or a rate, compounded annually, that is based upon changes in the Consumer Price Index

• Insured age 61-75, 3% per year or CPI• Insured 76+, inflation protection not required

LTC-P DisclosuresLTC-P Disclosures• Prospective applicants must be given a

Partnership Program Notice that outlines the requirements and benefits of a Partnership Policy

• At issue, policy must include a Partnership Disclosure Notice

• LTC-P disclosures are in addition to other required disclosures

LTC-P ExchangeLTC-P Exchange• Once an insurer begins to offer Partnership

Policies, insurer must offer the opportunity to exchange an existing LTC policy for Partnership Policy

• Insurer must make offer to persons whose LTCs were issued on or after February 8, 2006

• Insurer only required to make offer for LTC that is the type certified by the insurer

LTC-P ExchangeLTC-P Exchange• Effective date of Partnership policy is that of the

new policy• Insured will not lose any rights, benefits or built-

up value that has accrued under original policy• Exchange may be a new policy or an

endorsement to existing policy

LTC-P Optional ExchangesLTC-P Optional Exchanges• For policies issued before February 8, 2006,

insurers may offer insureds an option to exchange

• If insurer does so, all exchange requirements apply, including time limits, underwriting, and rate requirements

LTC-P Reporting RequirementsLTC-P Reporting Requirements

• LTC Partnership insurers must report to Department of Health and Human Services when– Insurance benefits have been paid and the amount of

those benefits– Partnership policy terminates

Reporting RequirementsReporting RequirementsUpon request of an insured, LTC Partnership

insurer must provide insured with LTC Partnership Program Policy Summary. That document includes where the policy was issued, the inflation protection option included in the policy, the amount of benefits paid, and the total dollar amount of insurance benefits remaining.

Producer Training RequirementsProducer Training Requirements• Producers must complete a one-time training

course of no less than 8 hours• Producers licensed for LTC on July 14, 2008,

have one year to complete the one-time training course

• After the one-time training, producers must complete ongoing training of 4 hours every 24 months

Producer Training RequirementsProducer Training Requirements• LTC insurers shall obtain verification that

producer has received training before permitting producer to sell LTC

• Insurer must maintain verification and make it available to the Department upon request

Questions? Please contact Questions? Please contact Susan.Dobbins@oid.ok.gov.Susan.Dobbins@oid.ok.gov.

Or visit our website,www.ok.gov/oid. Select Consumers, then “Buying Insurance” or

“Oklahoma Long Term Care Partnership”