Using Long-Term Care Insurance for Assisted Living in California

It depends on the type of policy. The California Department of Insurance describes three kinds. Nursing Facility and Residential Care Facility Only policies cover care in a nursing home and assisted living care in a residential care facility. Home Care Only policies cover care at home and adult day care, and do not cover a facility. Comprehensive policies cover all three settings.

Insurance policies rarely say "assisted living" or "board and care". They say Residential Care Facility, or Residential Care Facility for the Elderly (RCFE), which is the California license that covers both large assisted living communities and small board and care homes. The department says policies sold after October 2001, other than Home Care Only policies, are required to include a benefit for care in one of these facilities, and that some older policies include it too.

The department also warns that California law has changed many times, so a policy sold years ago may have different terms from the ones described here. The policy your mother or father actually holds is what counts. If you are still comparing ways to pay, start with how to pay for assisted living in California.

A policy does not pay just because someone moves into a care home. The person has to meet the policy's benefit trigger. For federally tax-qualified policies, the Department of Insurance says the law requires benefits to be paid when the person is impaired in two of six activities of daily living, or has an impairment of cognitive ability.

• The six activities are bathing, dressing, transferring, eating, toileting and continence.
• Impaired means needing substantial assistance, either hands-on or standby, because of a loss of functional capacity.
• Impairment of cognitive ability means needing substantial supervision due to severe cognitive impairment.
• Some companies also sell policies that are not tax-qualified. The department says these include ambulating as a seventh activity, and that it may be easier to qualify under them.

The insurer does, using its own review. The federal Administration for Community Living says most companies use an assessment form completed by a nurse and social worker team, and that after the assessment the company's care manager approves a Plan of Care that sets out the benefits the person is eligible for.

California's Department of Insurance describes the Plan of Care as a plan written by a doctor or a medical team that establishes the need for care, the kind of care and how often it is needed. Many policies require it to be updated from time to time. A home's own care assessment is a separate document that sets the home's care level and fee. The two do not always line up, so ask the insurer which records it will accept.

The elimination period, sometimes called a waiting period or deductible period, is the time you must wait after qualifying for benefits before the company starts paying. It was chosen when the policy was bought. The Department of Insurance lists 0, 30, 90 and 100 days as the most common options.

During that time you are responsible for the full cost of care. Policies count the days in different ways. Some count only days when paid care is actually received. Others use calendar days once the person has been certified as chronically ill. Some policies apply the elimination period once in a lifetime, and others apply it again after a stretch without care.

For a family, this means the first weeks or months in a home can be paid entirely out of pocket, even when the policy covers the home. Ask the insurer in writing how the days are counted and what date the count began.

Most policies pay up to a daily maximum until a lifetime maximum is used up. The Department of Insurance says policies most often work on a reimbursement basis, which means payment comes after the covered care has been received, the cost has been incurred and a claim has been submitted. Some policies, usually more costly ones, pay a cash benefit instead.

You are responsible for whatever the policy does not pay. If the daily maximum is lower than the home's daily cost, the family covers the difference each month. Policies bought with inflation protection will have a higher daily maximum now than the figure on the original paperwork, so ask the insurer for the current daily benefit and the remaining lifetime maximum.

It also helps to ask whether the policy pays the same daily amount in a residential care facility as it does in a nursing home, since the policy sets that. For what homes charge, see assisted living costs in California.

Each company has its own claim forms, so the list below is a common pattern, not a rule. Start as early as you can, because the elimination period and the paperwork both take time.

1. 1

   Call the insurer and open a claim

   Have the policy number ready. Ask for the claim packet, the benefit trigger wording, the elimination period and how its days are counted, the daily maximum today and what is left of the lifetime maximum.

2. 2

   Ask what kind of home the policy accepts

   Policies define the facilities they cover. Before choosing a home, ask the insurer to confirm in writing that a licensed RCFE of that size meets its definition, and what proof of the license it wants.

3. 3

   Get the medical paperwork moving

   The insurer will arrange its assessment and will want a Plan of Care. Ask your parent's doctor early, and tell the home an insurer will be asking for records.

4. 4

   Find out what the home must send

   Insurers commonly ask the home for a form about the facility, care notes or a service plan showing the help being given, and monthly bills. Ask the home who handles insurance forms.

5. 5

   Keep itemized bills and proof of payment

   California law requires an admission agreement to say that the resident will receive a monthly statement itemizing all separate charges. Keep each statement, since a reimbursement policy pays after costs are incurred.

The Health Insurance Counseling and Advocacy Program (HICAP) is sponsored by the California Department of Aging and gives free counseling on long-term care insurance. The Department of Insurance lists 1-800-434-0222 as the number to find your local HICAP office. The department regulates insurers and has its own consumer line at 1-800-927-4357.

Hamssa Benrekia is a senior living placement specialist in Torrance who works with families in the South Bay and Harbor area of Los Angeles County. She does not file insurance claims or decide what a policy covers. She can help you shortlist licensed assisted living communities and memory care homes that fit the budget once you know what the policy will pay. Veterans may also want to read about VA Aid and Attendance. The full list of topics is in the California Assisted Living Placement Guide. To talk about homes, contact Hamssa.