Most long term care insurance policies provide only reimbursement option. As the name suggests, the reimbursement LTC policy reimburses the expenses limited to the policy’s cut-off upon the submission of receipts. Admit it or not, the expenses that might be incurred from your LTC can go beyond the limits, but the reimbursement policy is not designed to fulfill any excess payments from your actual benefits.
You may want to take control over your care but your reimbursement policy prevents you from doing so. One solution to this is purchasing indemnity long term care insurance. This works the same as the other policies. You need to possess the allowable condition or qualifying events to become eligible for the benefits. A plan of care must be submitted and approved
The only difference of indemnity is its guaranteed privilege of control over your expenses. You will be given the maximum allowable daily benefit amount that you could freely use to pay for your care or put it on savings. It does not require submission of receipts before the insurance company reimburses the pay.
This type is more suitable for those receiving care at home. The family or caregiver will find it manageable because they don’t need to collect and track medical bills. Otherwise, they won’t miss any reimbursement if they fail to keep the receipts.
However, this type has several disadvantages and you should be wary if it is suitable for your situation. Many companies offer this protection as a rider or addition to your original policy; thus, this can escalate the price of your premium. The indemnity is designed and more appropriate for younger people and not cost-effective for policyholders in their mid-60s and above. Obviously, this is much expensive than claims-based policy. So before prepping up for your LTC, you should assess if indemnity long term care insurance will suit you best.
There are two kinds of indemnity policy: the full and the partial
Full Indemnity Policy
This type provides maximum flexibility to the insured. You will receive benefits regardless of your actual expenses. If your policy pays $6,000 monthly benefit and your actual expenses incurred is $2,000, the insurer will pay in full even if the expenses are less than the monthly benefits. You can use the excess money however you want ‐‐ pay mortgage, invest on a business, or save it up for your children’s future. In short, you can maximize the money for your care and other things that matter.
Partial Indemnity Policy
Once you receive long term care for at least an hour per day, you are entitled for a daily benefit regardless of the actual expenses. If your policy is paying $200 daily benefit, you can get it in full despite of spending half or just a quarter for your care.
Both full and partial indemnity policies can provide benefits than having no insurance at all. Whichever type you choose, you learn how to spend your money wisely. You should be well prepared with unexpected expenses and spend the remaining money
