In this episode, I’m joined again by Long-Term Care expert, Hospital Discharge Planner, and Geriatric Care Manager Eileen Dunn where we guide you through what to expect during the claims process for long-term care insurance.
More specifically, Eileen and I discuss:
- When is it time to make a long-term care insurance claim?
- What are some reasons why someone may be denied a long-term care insurance claim?
- How long does it typically take between initiating a claim and actually getting approval?
- Who pays the care provider, you or the insurance company?
- How does a waiver of premium work?
- How does an elimination period work?
Retired·ish Episode 18: What is Long-Term Care & How Does It Work? With Eileen Dunn: Long-Term Care Series, Part #1
LPL Financial and Planable Wealth are not affiliated with or endorsed by Eileen Dunn.
The Claims Process for Long-Term Care Insurance, with Eileen Dunn
00:00:28 - Cameron Valadez
Hello, and welcome back to Retired-ish. I'm your host, Cameron Valadez, and we are back with the last episode of our four-part long-term care series with long-term care superstar expert Eileen Dunn. So far, over the last three episodes, Eileen and I have discussed what long-term care means, how long-term care insurance works, and how to determine how much long-term care insurance that you may need. And today, Eileen is going to walk us through the more technical part, which is the claims process for long-term care insurance. Eileen, how are you doing today? Good job. You're back again.
00:01:04 - Eileen Dunn
Oh, thanks. Good to be back.
00:01:06 - Cameron Valadez
Hey, Eileen. I am really excited about this one because this is probably the one nuanced area of long-term care that most people know nothing about or don't even think about for that matter, and likely will know nothing about until they are already going through it or helping someone that's going through it. You don't really find this information in too many places out there, and you literally live this almost every day. So I'm excited for you to educate our listeners on this so they can plan ahead.
00:01:36 - Eileen Dunn
00:01:37 - Cameron Valadez
First thing is first, whether it's you, a spouse, or mom and dad, somebody starts to need some pretty consistent assistance with daily living, whether it's due to the beginning stages of memory loss or mobility, et cetera. And you think it's time to call the insurance company who holds the long-term care policy. How do you know when it's time to actually make a claim?
00:02:03 - Eileen Dunn
Well, first off, that I would suggest, and this is way before the claims process even starts, is that you call your insurance carrier and give them permission to talk to one or two people who might be involved if and when you do need the care. Always be good if you had a power of attorney, just someone that they can talk to, because when the claims time does come, if you call up, they're not going to be able to give you any information without actually speaking to the person, which they may or may not be able to do. So I always think that's a good idea, especially have a POA, because otherwise, you'll have to be texting, sending, faxing them in paperwork and all of that. So that's one step that you can get right out of the way. The other thing that I would suggest is that you review the actual policy, the benefits, and the eligibility criteria before making a claim and then really take a look at it and say, does this person fit that criteria? And how often are we giving this assistance? Is it daily? Is it occasionally? Is it just every once in a while, many people will file too soon, and then they wind up being denied.
00:03:14 - Cameron Valadez
Got you. I would like to add that when it comes to dealing with insurance companies of any kind, so not just long-term care insurance, but any kind of insurance, things don't always go so smoothly or so straightforward. That being said, what are some of the main reasons people are denied to go on claim?
00:03:34 - Eileen Dunn
One of the main reasons that I've seen is that people kind of jump the gun a little bit. In our past podcast, we talked about the main trigger to get the eligibility for benefits is that someone requires standby assistance with two of the activities of daily living, the ADLs. And those are bathing, dressing, eating, continence transferring, and toileting. Bathing and dressing are usually the first two ADLs that people need assistance with and the easiest to manage at home. The other trigger for benefits is that someone has a cognitive impairment that requires continual supervision. Those are the primary triggers to receive the benefits. Once you meet that trigger, then the policies will cover assistance with the IADLs or the instrumental activities of daily living. That's what we refer to as the homemaker services. Things like meal preparation, laundry, light housekeeping, shopping, those kinds of things. And care usually comes about incrementally.
Most of my clients come to me when they start needing somebody to maybe come in the house a few days a week and do some of the heavy lifting, like the laundry and changing the sheets on the bed. They'll do meal preparation, shopping, that kind of thing. Then down the road, they might need some assistance with the ADLs. But just assistance with the homemaker services is not going to be enough to trigger. I've had some people that have called and said, well, she can't drive anymore, or she can't cook anymore. Well, those are homemaker services. That's not going to be enough to trigger the benefits. Another thing that I've seen is that the information that they provide is either incomplete or incorrect. It's really important to document things very clearly. You want to give them a clear picture as to what's going on in the house. The more information that they have, the better.
00:05:35 - Cameron Valadez
Got it. So let's say that I've reviewed the policy, and I think it's officially time for a claim. I, or whoever I'm helping, we meet two of those six activities of daily living. Everything is accurate and in good order. What do I do next?
00:05:52 - Eileen Dunn
It's very simple. You just call the company and tell them that it's time to initiate a claim. And then, they will just send you a claims packet to be completed.
00:06:02 - Cameron Valadez
Got it. Okay, so once the claim is initiated, you've got the claims packet, you filled that out, and again, it's in good order according to the insurance company. How does the actual process work moving forward? Can you walk us through that?
00:06:15 - Eileen Dunn
Yes. And the claims packet isn't as scary as some people seem to think it is. I'm actually looking at some claims paperwork right now for a client. They're going to just ask some of the basic questions, and it's mostly about the bathing dressing, those ADLs that we talked about, and it says, Is assistance required? You say yes or no, but with bathing, bathing is a big issue sometimes for seniors, and you have many that just don't want to do it just because they're not doing it, or they might only do it once a week or once every other week. The question is, do they need assistance? So some people would say, oh, well, we'll have to say no to this because he's not bathing. Well, no, if he were to bathe, he would be requiring assistance. And, of course, that's going to be the goal. And they'll ask you when that started and if they think it's going to last for 90 days or more.
Part of that is also you'll have to get an attending physician statement. They're just going to ask, how often are the person getting care, who are their physicians, those kinds of things. So that's not too bad. And once that happens, then they're going to have someone from the company that's going to call you, usually, a care coordinator. Now, these people are not employees of the insurance company. Some people think, oh, well, if they're going to call to evaluate this and look over the claims, is this some sort of a gatekeeper? Well, they're not. There are organizations out there that have nurses and social workers that are part of their national networks. There might be Care Scout, there's Living Strategies, some different ones. So when someone goes on claim, the company is going to call, say, okay, who do I have to go see in the zip code? Who do I have in this zip code as a care coordinator that's registered with us? They will call the care coordinator and say, we have to have someone seen within 24 to 48 hours. Are you available? And if that care coordinator says, yes, I am, they'll send them the paperwork, and then that care coordinator will get in touch with you. But they're not going to put their license on the line for an insurance company. So they are independent people. They are paid by the insurance company, but they are not employed by the insurance company. And then once that goes through, then the company will take a look at things.
00:08:37 - Cameron Valadez
Now how long does it typically take between initiating the claim and sending that paperwork in and having the phone call, and actually getting approval from the insurance company?
00:08:48 - Eileen Dunn
It can take anywhere from 30 to 60 days because you first call and initiate the claim. Then they'll get the claims packet to you. Then you get that filled out with all the documentation that you need. That gets back to the company. They get the care coordinator out there you go through that process. Very often, they're doing that by either video chat; occasionally, now they'll send people out to the home, but most of the time, it is done by phone. That initial setup is what takes the most time. So this particular claim that I'm working on it asks when did this care begin? And the care for this gentleman began on December 1, but they didn't initiate a claim until mid-February. But because they did have the documentation that the care was being received, the insurance company went back to December 1. So we sent them all the information from December 1. Now it wasn't until May 17 that they got that payment, but again, that payment was retroactive back to December 1, and it was almost $10,000. But now it's automatically deposited on a monthly basis. So that initial phase could take a couple of months. But once that's there, it's set, and everything usually goes pretty smoothly.
00:10:13 - Cameron Valadez
That's actually a very common question a lot of people have, and that is, does the insurance company pay the care provider, or do they pay you, the insured, or the family member helping out so that you can turn around and pay the provider for whatever services that they gave you. Can you explain that one?
00:10:34 - Eileen Dunn
Most of the companies do allow you to choose. You can either pay for the care yourself and then get reimbursed by the company. Many companies will say that we will just pay the provider themselves. And a lot of those companies you can get online and look at all of those receipts to compare. So that's really a matter of choice, most of the time. There might be some companies that still say, no, we're just going to reimburse you. But most of them, in today's environment with electronic billing and all that, are open to that.
00:11:08 - Cameron Valadez
Yeah, I would say either way, just make sure that you have some sort of accurate record of receipts or invoices because that will be important when it comes to tax time, actually, like we discussed in previous episodes. So to piggyback off of that, is all of this done by or via a paper trail, or is this all electronic nowadays?
00:11:32 - Eileen Dunn
A lot of it is electronic. Some of it depends upon the company. This particular claim that I'm working on right now, they sent us, they just emailed us the paperwork that we printed out, filled out, and faxed back to them, but many of them will do it all electronically now. I'm doing another claims process for someone right now, and we're including hospice, and everything's being done electronically. So part of that will depend upon the company. But even ones that have the initial claim, that is, the paper, usually, the follow-up, and everything else is done electronically.
00:12:09 - Cameron Valadez
I think it's a good time to bring up something we mentioned in a previous episode, and that was the waiver of premium. Can you remind us of what that is and how it typically works?
00:12:19 - Eileen Dunn
Sure. The waiver of premium states that once you start receiving benefits from your long-term care policy, you do not have to pay your premiums while you are on claim.
00:12:31 - Cameron Valadez
Okay, well, so that's a nice feature. One less thing to worry about, cash flow wise. Now you've got some more money you can free up for your care, right?
00:12:39 - Eileen Dunn
00:12:40 - Cameron Valadez
Another thing we mentioned, however, very briefly in a previous episode was the elimination period or waiting period. Can you explain to us the nuances of the elimination period and how does that work?
00:12:52 - Eileen Dunn
Sure. The elimination period is basically your deductible. How many days of care are you willing to pay out of your pocket before the benefits kick in? The most common one is a 90-day elimination period because most people say, I don't mind paying something for my care, I don't mind paying a couple of months, but I just don't want to bleed out everything. So most people do choose that 90 days. And the other thing I would note is that, again, where the documentation comes in, you want to make sure that you have documentation of care that is received during that time. So whether that's an invoice, if you did have an agency or somebody come in but also many of the policies will allow, like if you've had a Medicare covered service, let's say you've been in the hospital for a week and then you came home and Medicare covered you for another week. Those days will count, and you're going to have to have some invoices supporting those costs. And for Medicare charges, you're going to need them to provide a copy of what they call the Medicare UB04 form and to submit those. You don't always receive that kind of documentation. So you want to let your care provider know right away that you're going to be filing a claim and that you need copies of the UB04 statement. Most people will get what they call a Medicare explanation of benefits, but that doesn't really contain the detailed information that you need to apply to get credit for the elimination period. But a lot of times, Medicare days that are covered can count as an elimination period, as an elimination day.
And the other thing is that if you're getting care at home, even if you only have the paid care for three hours in a day, that would still count as a day. It doesn't have to be an eight-hour day. As long as you've gotten paid care that day, that will count as an elimination day.
00:14:51 - Cameron Valadez
Awesome. Yeah, that's good to know. Thank you for sharing that. In one of our previous discussions, you said that you had clients that have used their long-term care insurance but then got better and actually went off claim. So how does the waiver of premium and the elimination period work in those kind of cases?
00:15:11 - Eileen Dunn
Okay, well, that is a good question. And again, the waiver of premium means that once you start going on claim, you don't have to pay your premium. So when I've had a client that has gone on claim, and I had one that was on claim for about ten or eleven months while she was on claim because she paid her premium annually, she actually got money back. She got accredited for those months that she was on claim. Once she went off claim, well, then she would just resume paying her premium again. Now, as for the elimination period, that only has to be met once in a lifetime. So once you get through that 90-day elimination period and you go off claim, and then down the road, if you trigger another benefit period, you do not have to go through the elimination period again. You would begin to get care from day one.
00:16:03 - Cameron Valadez
That's really good to know. Thank you for that information. Yeah, so you just kind of have to worry about paying your premium again if you go off, keep records of the care that you got before, even if it was a year or two ago, and you get to continue on that same timeline to get out of that elimination period. Well, Eileen, I think that buttons up the claims process pretty well at a high level. What do you think? Any subtle reminders or last tips that you'd like to add and share with the audience?
00:16:33 - Eileen Dunn
No. Again, I think it's important that the company has someone on record that they are allowed to talk to about you and your policy. It's also important to remember, again, that when you receive these benefits, it's non-taxable income. And that can be huge because if you have to start paying for the care out of your own investments, there's probably going to be a taxable event there. Then I think it's good to try to utilize the care coordination, which is very good, but more importantly, really take a review of the policy before you try to initiate a claim and make sure that they do need that standby assistance with the ADLs or have that cognitive impairment that requires that continual supervision. And you can always ask a local healthcare provider if you have a nurse friend or someone that's familiar with it. You could probably even call the person that sold you the policy, and they might have some resources to help you also.
00:17:27 - Cameron Valadez
Awesome. Well, thank you for leaving us with those last couple of tips. I mean, those are all extremely important, and yeah, we've noted a lot of that in our previous episodes. But again, if you have any questions or anything like that for Eileen or I in the future after listening to this episode, feel free to jump on the website and ask a question, and we can get together, and Eileen and I can help you answer some of those more nuanced questions.
Well, thanks again for educating the Retired-ish community all about long-term care and sharing your experiences with us. You truly are a gold mine of information.
00:18:03 - Eileen Dunn
Well, thanks for having me, Cameron.
00:18:05 - Cameron Valadez
I will provide resources in the show notes of today's episode if you'd like to check out some of the previous episodes of the series. And, of course, if you have a question for Eileen or I that you want answered on the show at any time, you can always visit the Ask a Question page on the Retired-ish website. I will include a link to that in the show notes as well.
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00:19:44 - disclaimer
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