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Well-Designed LTCs Focus On Life

The following is an excerpt from an article which appeared in the October 13, 1997 edition of National Underwriter:

Well-Designed LTCs Focus On Life

By Samuel X. Kaplan, Chairman, U.S. Care, Inc

Today's innovative and most successful long-term care insurance policies focus on life. That is, they emphasize asset protection, maintaining the insured's autonomy, independence and dignity while reducing the burden on the family, and improving the quality of life. 

To appreciate some of the life-enhancing features of the modern products, it helps to revisit their short but ever-evolving history. 

The products have been around in one form or another since 1974. But it is only in the past decade that a full-blown industry was born, spurred on by increasing national recognition that LTC is our country's largest unfunded liability. 

Early on, there was no government protection or group policy coverage of LTC costs, so individuals searched for their own answers—and found them, in a series of rudimentary "Nursing Home Only" policies often tagged onto term life insurance as an optional rider. The thinking was that the rider would provide coverage for the last stop before the term life proceeds would be paid to beneficiaries. 

But as insurers identified related needs, basic nursing home policies were later developed, and then increasingly enhanced and expanded. Today, many basic LTC policies are still available. But many others have expanded covered LTC services well beyond traditional nursing home care to include a wide range of options geared towards independence in a home setting, whenever possible. 

Today's forward-looking LTCs cover home health care, assisted living care, independent living care, adult day care, residential facility care, personal/custodial care, and homemaker services, to name a few. 

And although this market is still relatively young, there is a great deal of standardization for LTC group or individual plan designs. Why? Because this is a copycat, "me-too" business. If one insurer offers a range of differing benefit options, eventually most of the others will follow suit. 

Therefore, you need to look beneath the surface of the benefit choice names to determine if a particular LTC has features that set it apart from the crowd. Here are some things to look for in a well-designed LTC: 

A continuum of care, to meet the physical, psychological, social, spiritual, and practical needs of the insured. Integrated services that build bridges between acute, institutional and home care. The providers are quality-rated--not with lip service, but with standards that are instituted and monitored. The policyholder should be advised of the ratings. 

In addition, unlike acute care, which focuses on "curing" the individual, a good LTC features mechanisms for "caring" for the individual, usually for a long period of time. 

The complex LTC delivery system has the potential for overwhelming those requiring care, so leading edge LTC plans include a mechanism for accessing benefits that will meet ongoing needs. 

To do this, the most successful LTCs offer the services of a "care advisor" or "care coordinator" (usually a registered nurse or licensed social worker) to help insureds navigate the complicated LTC system throughout their disability. I believe that "Managing Caring" is the single most important aspect of any LTC plan. 

Furthermore, a properly designed LTC plan pays all or most of the costs of care, assures that care meets quality standards, protects assets, and provides assistance to families. It is critical that the benefit triggers for LTC be clearly defined and that the benefits be made portable. 

Cutting edge LTC benefits should focus on individual choice. An integrated benefit or "pool of dollars" concept increases flexibility and choice. 

Through the "pool of dollars" innovation, the insured can choose where and how benefits will be accessed. Rather than having a daily maximum for nursing home care and a daily maximum for home health care, the insured may select the setting of care and utilize the "pool of dollars" as he or she chooses. 

If the insured elects to access home health care, which is less expensive than nursing home benefits, the "pool of dollars" will stretch to cover more days of care. 

Finally, a cutting edge product should have no upper limit on age: Age 100-and-up should be available to anyone who can be underwritten. 

The popularity of LTC benefits has produced a shift in the market. More employers are offering LTC benefits on a voluntary, employee-pay-all basis, than ever. Hence, the market is moving from an individual policy base to a group market that is looking for LTC innovations to serve as a "value-added" benefits offering to employees and their families. 

As the market grows more sophisticated, the LTC product offerings must grow and change to keep pace. 

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