Reports of nursing homes with large COVID-19 outbreaks, strict lockdowns and no-visitor policies are making people think more carefully about where they or their aging parents want to receive care if they need help in the future. It’s also sparked more interest in long-term care insurance, which can help you afford more care options in an assisted-living facility, nursing home or your own home. Home care can be expensive: The median cost of a home health aide was more than $4,385 per month in 2019 – adding up to more than $52,000 per year, according to the Genworth cost of care survey. That’s for 44 hours of care per week – the costs can be much higher if you live in an expensive area or need round-the-clock care. Long-term care insurance can help you pay those bills.
But even though COVID-19 is making more people interested in long-term care insurance, it’s also making it more complicated to buy the coverage and get claims paid. Here’s what you need to know about the changes and what you can do to make the process go more smoothly.
How COVID-19 changed long-term care purchases
State stay-at-home orders and unknowns about the long-term health effects of COVID-19 have made it more complicated for insurers to assess applicants and price the policies. Many temporarily restricted who could apply for coverage and added more steps to the application process. People who have tested positive for the virus may still be able to get coverage, but they have to jump through more hoops first. Even healthy people may end up paying more.
Reducing the maximum age for applicants. When states issued stay-at-home orders in the spring and insurers couldn’t conduct in-person exams, many reduced the maximum age for applicants. Some temporarily stopped accepting applications from people in their late 60s or early 70s, and a few reduced the maximum age as low as 65, says Brian Gordon, president of MAGA Long-Term Care Planning in Bannockburn, Illinois. In May, eight out of 10 of the long-term care insurers he works with made changes to the age requirements.
“At certain ages, they want to see people face to face,” says Gordon. The insurers want in-person meetings with older applicants so they can do a cognitive screening and assess their mobility, especially for applicants who have knee or hip problems.
But now that many states are relaxing their restrictions, most insurers are resuming in-person interviews and accepting older applicants again. “As states are loosening up restrictions, they’re offering coverage to more people over age 65 or 70, depending on the insurance companies. But not all insurance companies have lifted the restrictions yet,” says Gordon.
Extra scrutiny for people who tested positive for COVID-19. You may still be able to get long-term care insurance if you’ve tested positive for COVID-19, but you’ll have to provide a lot more information.
Even if you tested positive but didn’t have any symptoms, many insurers want you to wait for three to six months after receiving a negative test before applying for a policy, although some have a shorter wait, says Gordon.
You’ll also have to answer a lot of follow-up questions if you had a positive test. “They want to know if you were hospitalized, did you have complications, and when did you return to normal activity and end self-isolation,” he says. “The companies are concerned because there are so many different things with the lungs, and a lot of unknowns with it now. They’re being more conservative than usual.”
Gordon worked with a friend in her early 50s who tested positive for COVID-19 in March. When she applied for long-term care insurance a few months later, the insurer sent someone out to her home for a face-to-face interview. They also did a blood and urine test like insurers usually do for life insurance but not as often for long-term care, says Gordon. “They wanted to make sure she didn’t have anything with COVID in her body anymore,” he says. “The tests came back negative each time, but the companies are definitely being more careful.”
Since COVID-19 numbers continue to rise, insurers are also asking about your health again right before they deliver the policy, to make sure nothing has changed since the time you completed the application.
Faster applications for healthy young people. Meanwhile, the application process can be a lot faster for younger applicants who haven’t had a positive COVID-19 test. When possible, insurers are trying to have phone interviews rather than meeting face-to-face and are using electronic medical records rather than waiting for to get files from doctor’s offices, which was particularly helpful when the offices were closed or short-staffed.
Increasing premiums. A few long-term care insurers recently announced that they will be increasing premiums for new applicants. A few boosted rates for new buyers in July, some are increasing premiums in September, and other companies may follow suit. Some are charging from 5% to 50% more depending on the applicant, and are reducing spousal discounts – from 30% down to 15%, for example. Premiums can vary a lot by insurer while they’re in the midst of this transition.
Some of the increases are due to the unknowns from COVID-19, but another major reason is because low interest rates continue to limit the returns on insurers’ investments.
How COVID-19 has changed long-term care claims
COVID-19 has made long-term care claims more complicated, especially when people want to switch from one type of care to another – such as moving from an assisted-living facility to home care. It’s also become more difficult to find home-care workers in some areas, or to adjust their schedules to minimize the risk of exposure. And it has made it more difficult for insurers to complete in-person assessments to determine whether a person meets the eligibility requirements to receive benefits. Here are some tips for navigating COVID-related claims issues – for yourself or your spouse, or if you’re helping your parents or other relatives with a claim.
Find out about coverage details before you switch to home care. “COVID-19 has really reinforced that you have the most control when you’re at home, and that makes it important to really compare the home-care provisions of the policies,” says Jesse Slome, executive director of the American Association for Long-Term Care Insurance.
Check your coverage before switching care locations. Most long-term care policies cover care in a nursing home, assisted-living facility or home care as long as you meet the benefit triggers (usually defined as needing help with two out of six activities of daily living, such as bathing and dressing, or severe cognitive impairment). But some older policies pay smaller benefits for home care or only cover care in a nursing home.
Before you hire a home-care worker, find out about the policy’s requirements – some only cover licensed home-health aides who work for an agency, but others cover anyone other than family members who provide care. And some policies provide a lump sum that you can use in any way – including to pay family members – as long as the person qualifies to receive care.
Also, find out how the waiting period is calculated. Some policies have a 60- or 90-day waiting period for care in a nursing home or assisted-living facility, but a 0-day waiting period for home care, which means your policy may start paying out a lot sooner (before you spend as much out of your own pocket) if you receive care at home.
Review your daily or monthly benefits before changing your caregiver’s schedule. Byron Cordes, a geriatric care manager with Sage Care management in San Antonio, worked with the family of a man who needed 24-hour home care. They originally had several different caregivers coming to the house in shifts, but because of COVID-19 risks, they wanted to switch to have one live-in caregiver working longer shifts to reduce his exposure to different people. The policy still paid benefits for the new caregiver, but the extra cost was more than his monthly benefits and he had to pay more out of his pocket for the care.
Some families have the opposite situation because of the pandemic. Family members who lost their jobs or have more flexibility with their schedules can now provide more care to their relatives themselves and they may not need to pay as much for caregivers each month. If they don’t spend their maximum monthly benefit, they may be able to carry over the extra money to future months.
If they only need care a few days a week and they’re still in the waiting period before coverage kicks in, find out how the waiting period is calculated. Some policies with a “calendar day” elimination period start the clock ticking on the 60- or 90-day waiting period as soon as the person meets the benefit triggers to receive care, but others have a “service day” waiting period that only counts the days they actually receive care. If you have that kind of policy, it can be better to schedule home care for a few hours every day rather than for a few full days each week.
Take advantage of resources to help find new caregivers. Some families need to find new caregivers if their home health aides don’t feel comfortable working with the risk of COVID or if they move from a nursing home to home care. Other caregivers added large surcharges to continue to provide home care.
Find out if your long-term care policy has a service that can help you find caregivers that meet the policy’s requirements. A geriatric care manager can also help you find caregivers and facilities in your area – you can find them through the Aging Life Care Association.
Know when to appeal claim denials. COVID-19 made it more difficult to get some of the paperwork that insurers require to pay claims. Mindy Hartman of the American Association for Long-Term Care Insurance recently helped the family of a woman with Parkinson’s who was already on claim but wanted to move from a nursing home to home care. The insurer initially denied the home-care claim because she didn’t have paperwork from an in-home health assessment, which was difficult to get during the pandemic. Hartman worked with the insurer to provide evidence that she still met the benefit triggers for coverage, and was able to get the denial reversed in about two weeks.
If a claim is denied, find out why – in many cases, paperwork may just be missing from the caregiver or facility to provide evidence of the expenses for reimbursement.