Know Your Rights – Long Term Care Insurance

Many people have long term care insurance, especially when they get older, because the cost of prolonged individual care due to an injury or illness can be significant.  For that reason, Long Term Care insurance is often part of people’s estate plan.

Long Term Care insurance can be subject to problems because the premiums get paid for years and years before coverage is needed, and, once it is needed, the policyholder is potentially to infirm to proactively protect their rights and make sure the insurer follows the policy.

Fortunately, Washington State’s insurance regulations give policyholders specific rights under Long Term Care insurance.

Long Term Care insurance policies must clearly explain the eligibility criteria and triggers for benefits, and advise the policyholder what circumstances give rise to a claim for benefits under the policy.  This includes specifying what medical findings a doctor must make to trigger coverage.  Further, eligibility requirements cannot be overly restrictive and cannot require an insured be precluded from performing more than three “Activities of Daily Living” (e.g., bathing and dressing).  Importantly, the Long Term Care policy must provide that the insured cannot perform an Activity of Daily living if the insured requires another person’s significant assistance.

Similarly, Long Term Care policies cannot limit benefits to unreasonable time periods or dollar amounts.  And, if the Long Term Care insurance policy replaces prior coverage, the insurer cannot apply an exclusion for pre-existing conditions.

Washington State law also limits what insurers can exclude from Long Term Care policies.  Long Term Care policies can only exclude coverage for things like acts of war, criminal acts, chemical dependency, etc.

Additionally, insurers cannot cancel Long Term Care policies unless they obtain for the policyholder equivalent coverage with another insurer.

Lastly, Long Term Care insurance must provide a grace period for the insured to make up missed premium payments.  This right is particularly significant because the beneficiaries of Long Term Care insurance are often elderly and rely on their children or others to handle their financial affairs and pay premiums.

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