Long-term care insurance was originally designed to protect purchasers from the catastrophic expense associated with long-term care in a nursing home. However, over time the public has clearly voiced a preference for home care over care in an institution. In response to that preference, long-term care insurance companies now offer a variety of in-home services to help individuals pay for services to assist a person with activities of daily living. In fact most policies sold today are comprehensive policies which cover services in different long-term care settings including at home.
The majority of policies sold today are comprehensive policies. They typically cover care and services in a variety of long-term care settings to include at home skilled nursing care, occupational, speech, physical and rehabilitation therapy, and personal care. Some policies also cover homemaker services, such as meal preparation or housekeeping as well; adult day health care centers; hospice and respite; assisted living; and other residential care facilities and nursing homes.
Consumers should be aware of limitations on coverage, such as prior hospitalization requirements, and pre-existing condition exclusions. It is important to thoroughly understand what is being purchased, so a good deal of homework is involved in examining long-term care policies. Be sure that the services purchases are not services that are already covered by Medicare.
There are incentives in the form of resource protection offered by Medicaid for a person to purchase long-term care insurance.
For policies issued prior to March 1, 2009, Medicaid will not consider resources of a person equal to the amount of long-term care insurance benefit payments in determining Medicaid eligibility when the long-term care insurance policy has paid at least the first three years of nursing home care and/or home health care services.
For policies issued on or after March 1, 2009, Medicaid will not consider resources equal to the amount of benefits paid (dollar-for-dollar) by an Alabama Long-Term Care Insurance Partnership Policy (Partnership Policy) for long-term care services received in determining Medicaid eligibility and in estate recovery. The amount to be excluded will be above and beyond the standard resource exclusion provided under the Medicaid State Plan. To qualify for this exclusion, the individual must be covered by a Partnership Policy that has been certified by the Alabama Department of Insurance as a policy that covers a person who was a resident of Alabama when coverage first became effective under the policy. Medicaid will provide reciprocity with respect to long-term care insurance policies covered under other states.