Taking Care of Mom and Dad: Group LTC Policies and Other Options
In the 1990s and 2000s, group LTC contracts have begun to appear -- as well as LTC benefits attached to new or existing life insurance in the form of policy riders.
Typically, group health insurance is written for employer-employee situations, professional associations and trade unions. Eligibility for participation in these group health plans is often restricted to employees and their dependents.
Many employer group LTC contracts marketed today provide the following participation eligibility: the employee and spouse; parents of both the employee and the spouse; retired employees and their spouses. Premiums can be paid through payroll reductions, just like other employee benefits.
This is a liberal benefit, in that it not only covers the employee and his spouse but reaches out to provide coverage for an older generation -- as well as retired workers and their spouses. These older people may not be insurable on their own.
Employers can usually offer LTC coverage to their employees on a group basis with little cost other than adding the premium deduction to their payroll systems. The standard benefits offered under group contracts are similar to those offered as individual policies. Benefits typically offered include skilled nursing care, intermediate care, custodial care and home health care.
Hospice care may also be provided by the group policy as a standard or optional benefit. Another optional policy benefit is adult day care that provides a functionally impaired adult with a daytime environment of social as well as certain functional activities. Adult day care usually includes transportation to the day care facility, at least one meal and certain vocational or recreational activities.
Most group contracts provide that benefits will be paid based on one or more of the following criteria: the policyholder has been hospitalized for a period of time (usually three days) due to an accident or illness and, as a result, it becomes necessary to put him or her in a nursing home; the policyholder has to go to a nursing home due to an accident or illness without prior hospitalization; the person is unable to perform some of the activities of daily living.
Most group contracts are on an indemnity basis as opposed to an expense-incurred basis. This means that the coverage doesn't require your parents to pay bills first and then be reimbursed. Daily benefits range from $50 to $150.
Elimination periods under group contracts range from 10 to 100 days and the benefit periods are usually three to five years in length. Typically, the group elimination period seems to fall between 30 and 90 days with at least a three-year benefit period.
