Kiplinger’s Personal Finance has become an excellent resource for unbiased and mostly accurate information about long-term care issues in general and LTCI in particular.

A recent article posted on their website is a good case in point. It gives a nice overall explanation on the fundamentals of how LTCI policies actually work. One of the points made in the article is what actually triggers coverage under these policies and here is an excerpt from that article:

“Generally, benefits become available once you meet three of the following conditions:

1. You are unable to perform two of six basic activities of daily living (such as bathing or dressing) or you show signs of severe cognitive impairment, such as those associated with dementia.

2. Your doctor or other health professional certifies that your condition is expected to last at least 90 days.

3. You pay for long-term-care services for the number of days in your waiting period.”

I would like to add a couple of notable points about their explanation. The first is that cognitive impairment is said to be severe. What that means is that a licensed healthcare practitioner must determine that in their professional opinion the policyholder could be a danger to themselves or others if left unsupervised. A simple diagnosis of Alzheimer’s or dementia is not enough to trigger benefits. The disease has to be severe enough to actually require care and supervision.

One other notable point is concerning why there is a need for a certification of the need for care for at least 90 days. This is actually a provision that Congess helped instill in the tax-qualified policy design that was set up in 1996. The purpose is so that long-term care insurance policies would actually be used for long-term care illnesses and not short-term health care such as knee and hip replacements and other situations that may only require short stints in rehab.

These type of situations are usually covered in large part by health insurance or to some extent by Medicare if you are over 65. By excluding short-term care needs Congress effectively helped stabilize LTCI premiums as these policies would only be used for what they were actually designed for, which is long-term care.

The rest of the article by Kiplinger’s is very informative and it makes a great read. You can find it here.