Mutual of Omaha’s Long Term Care Insurance 'Cash Benefit'
November is Long Term Care Insurance Awareness month. This is as good a month as any to start looking into the different products out there and comparing benefits and cost. A key distinction between policy types among long term care products is the difference between Reimbursement policies and Indemnity policies.
Most long term care insurance policies are of the reimbursement type. These contracts will “reimburse” the policy owner for the cost of care that they paid for out of their own pocket to a care professional for coming to the home, or a cost incurred in a facility, such as an assisted living of nursing home environment. The amount reimbursed cannot exceed the maximum daily, weekly, or monthly benefit stipulated in the policy’s provisions. For example, Mrs. Smith has a $4,500/month benefit. A home health care agency charges her $5,000/month for services rendered by a care professional. The agency bills her the $5,000 at the end of the month which she pays out of her own pocket. She then sends the receipt of payment to the insurer of her policy who will reimburse her $4,500. Mrs. Smith had a total out-of-pocket cost of $500 for the month.
In the same situation, if she had an indemnity policy which had the same $4,500 available per month, she would be sent a check each month for the full amount of $4,500 regardless of whatever the cost of care is. For example, if the home health care agency came to the home less often in a particular month because family and friends where more readily available to assist with some of the care and only charged her $3,000 for the month, Mrs. Smith could pay the agency the $3,000 and have the other $1,500 available to pay the family members that came to help. As you can see, indemnity is a bit more flexible that reimbursement.
This leads us to the concept of the “cash benefit” provision on the Mutual of Omaha Custom Solutions Long Term Care contract. It is essentially a reimbursement contract, which more than 90% in the industry are, but the cash benefit acts like an indemnity feature on the policy. Up to 40% of whatever the reimbursement benefit is on the contract can be sent to the policy owner each month as I direct check that they can use to pay anybody they want to, and it doesn’t have to be a care professional!
The downside of a reimbursement contract is that only bills from a “care professional” (agency) or “authorized facility” will be acceptable for the reimbursement provision. In the above case, 40% of $4,500 per month is $1,800. Under this Mutual of Omaha cash benefit (which is not offered by most carriers and if it is, the percentage is usually a smaller amount), family members who are not care professionals can receive payment for their services!
Isn’t this what most people want in a long term care contract, the flexibility to be able to allow a person to stay at home and receive care by loved ones in a familiar environment as long as possible? That is exactly what the cash benefit can provide. Isn’t it time you looked into long term care insurance coverage today?
About the author: Kyle McDonald holds FIC, FICF, FSCP® & CLTC designations. His viewpoint on life insurance is simple, “Anyone with a family must have life insurance. In the end, life insurance is for others you care about, not you.” He is ready to help you and your family get the best option available. Contact Kyle today at 1-800-651-1953 or KMcDonald@Pivot.com.