Long-term care insurance is an essential component of financial planning, especially for those who want access to quality care later in life without depleting their assets. As healthcare costs continue to rise, LTCI offers a practical solution to help overcome financial barriers by covering a wide range of services, including assisted living, home care, and nursing homes.
However, qualifying for long-term care insurance isn’t automatic. Applicants must navigate a rigorous approval process to become eligible for its benefits. Understanding the eligibility criteria can significantly improve your chances of approval and help you avoid unexpected setbacks.
This blog will explore the underlying disqualifying factors that stand in the way of long-term care insurance and long-term care insurance exclusions and actionable tips to boost your chances of insurance success.
Why Insurers Disqualify Applicants
It would be naïve to argue that insurance is biased or that it favors certain individuals over others. In reality, certain factors determine whether or not you are a good candidate for insurance. This is a result of an underwriting process used by Long-term care insurance providers through which they access the risk of potential policyholders.
The purpose of this evaluation is to separate candidates with a greater likelihood of payout so that their policies remain financially sustainable. Applicants with health risks or existing care needs are at a disadvantage, as are those who apply at an advanced age. Ideally, insurance should be pre-emptive, which means that you should apply when your health prospects are good, such as in your 40s or 50s, when the risk of chronic diseases is considerably lower.
What Disqualifies You from Long-Term Care Insurance?
Health-Related Disqualifications
Surprisingly, health can become the very cause of your disqualification. This is most likely to happen in the case of certain medical conditions like Parkinson’s disease, Alzheimer’s or Dementia, advanced cancer, uncontrolled diabetes, or heart disease, making approval more difficult.
Cognitive Impairments
If you are diagnosed with cognitive decline or suffer from dysfunctional cognitive functions such as severe memory loss, this opens you up for disqualification.
Physical Limitations
You are likely to be denied if you suffer from a serious physical disability that hampers Activities of Daily Living (ADLs) like bathing, dressing, eating, or transferring. For LTCI providers, this is a clear indicator that you have existing care needs.
Use of Medical Aids
Applicants who are dependent on external aid for their day-to-day functioning, such as wheelchairs or externally provided oxygen, are seen as a high-risk group.
Lifestyle-Related Disqualifications
Your lifestyle choices can also be a significant make-or-break factor in the underwriting process.
Smoking or Substance Abuse
Strong addiction to tobacco or alcohol or a history of drug abuse are considered to be major risk factors which can be a solid reason for disqualification.
High-Risk Activities
Engaging in dangerous hobbies like skydiving or extreme sports can endanger your insurance claim.
Severe Mental Health History
Mental Conditions like schizophrenia, depression, or bipolar disorder that are left untreated can affect eligibility as they raise doubts about your sanity.
Age-Related Disqualifications
Age is a key contributing factor in improving your insurance credentials.
Applicants over 75–80
The application process becomes highly difficult for applicants in this age group as they are more susceptible to age-related conditions.
Over 65 with Health Concerns
Applicants who are in their 60s face a major stumbling block in their path to coverage if their cognitive powers have slowed down or they suffer from chronic illnesses or mobility issues.
The options become a lot narrower with age, so the key is to apply them as early as possible.
Situational Disqualifications
Certain conditions can complicate your insurance application process. For example, if you have had a major health issue that resulted in surgery or hospitalization, your eligibility may be delayed until you fully recover. Insurers are likely to reject you if you are a recipient of long-term care services in present times or if you can’t function without external assistance.
Why Do These Disqualifiers Exist?
Despite these factors, Insurers disqualify certain applicants as part of their risk management strategy. In doing so, insurers identify high-risk individuals to keep premiums affordable for others. This approach acts as a sort of safety net to protect the financial interests of the broader insurance pool and thus ensure that long-term care insurance policies are sustainable for the future.
Long-Term Care Insurance Exclusions
It is important to understand what is not covered by long-term care insurance, as even the best insurance policies come with long-term care insurance exclusions, situations, or services that are beyond coverage.
Excluded Services and Treatments
- Acute medical care in the form of emergency treatments, surgeries, or hospital stays.
- Alternative treatments or experimental therapies.
- Expenses for home-related changes, stair lifts, or wheelchair ramps.
- Failure to disclose a pre-existing condition can nullify future claims related to that condition.
Policy-Specific Exclusions
- Care options that lie outside of the insurer’s network of sanctioned providers or facilities are non-applicable.
- Designated mental health or substance abuse therapies.
Why Exclusions Exist
These exclusions allow insurers to focus on the most essential aspects of care and prevent rising costs.
Long-Term Care Insurance Limits
Even an approved policy is not immune to long-term care insurance limits to address implications related to costs and payouts.
Benefit Caps
- For the majority of policies, there are daily limits or a set amount for covered services, like $200 per day.
- The maximum payout limit is generally capped at $300,000, or it may be another predetermined amount.
Duration Limits
Some policies encompass care for a specified period, such as 2-5 years. Short-term care policies have limited benefits compared to traditional long-term policies.
Waiting Periods
There is a delay or waiting period that you have to endure after filing for a claim. The standard waiting period falls somewhere between 30 to 90 days before the benefits are set into motion.
Why Limits Exist
The ultimate goal of these limits is to keep costs under control so that insurers have the resources required for long-term care coverage for an extended population.
How to Improve Your Chances of Approval
Following these tips can markedly affect your chances of acquiring long-term care insurance;
Apply Early – Get started with the insurance process in your 40s and 50s when you are healthier so that you can be eligible for lower premiums.
Maintain a Healthy Lifestyle – Stick to a balanced diet and incorporate regular exercise in your regimen. Also, steer clear of smoking and limit your alcohol intake.
Address Manageable Health Issues – Consult your doctor to maintain your overall health, such as by controlling high blood pressure or diabetes.
Consult a Financial Advisor – A financial expert can offer you the necessary guidance to opt for the most suitable policies with stable underwriting policies.
Alternatives if You’re Disqualified
The good news is that there are alternatives to attend to your long-term care needs other than insurance, including:
- Medicaid: Medicaid is a publicly funded program geared to provide long-term coverage benefits for low-income families, although it is subject to income- and asset-based restrictions.
- Hybrid Policies: These are a good option for applicants who wish to avail themselves of the combined benefits of long-term care riders along with life insurance policies.
- Self-Funding: You can try setting up a dedicated fund by yourself or reserve your retirement savings for this purpose.
- Group or Employer-Sponsored Plans: The underwriting requirements are less stringent if you are privy to an Employer-sponsored LTCI plan.
- Annuities or Trusts: These financial tools come in handy to cover long-term care expenses in the absence of insurance.
Navigating Disqualifications and Exploring Your Options
This information will lead to an enhanced understanding of what works or not so that you are well-equipped to qualify for long-term care insurance. By paying heed to factors like age and health, you can greatly improve your prospects of eligibility and keep the risk of disqualifications to a minimum.
Insurance is unarguably one of the best investments you can make for your long-term care needs, but it is important to remember that disqualification is not the end of the world. Luckily, there are alternative options like Medicaid and hybrid insurance policies to tackle your potential care needs without financial strain.
Contact Lavine LTC
If you are looking for personalized guidance for your insurance decisions, you can trust Lavine LTC to help you find the best solutions for your needs. Our team of insurance experts will be there at every step of your insurance journey to turn Long-Term Care Insurance in Washington into a profitable venture and not a liability. Reach out to us today to learn more.