Short-Term Care:

STC Policy Functions

When you are chronically ill needing care, the functions of a short-term care insurance policy are generally:
  • What triggers benefits?
  • When do benefits begin?
  • How are benefits paid?
  • How much is paid?

Let’s take a look at each one and explain some basic functions of today’s short-term care insurance policies.

1. What triggers benefits?

What triggers benefits?

Short-term care plan can vary in their benefit trigger language. Most insurance policies sold today for short-term care do not require you to be “chronically ill” as do long-term care insurance plans.

In order to receive benefits for a short-term care plan to pay benefits generally you must have “a loss of 2 activities of daily living or severe cognitive impairment requiring substantial supervision”.

2. When do benefits begin?

When do benefits begin?

Benefits begin after the stated elimination period in the policy. The elimination period is the number of days before the policy starts paying for care. Most short-term care plans count calendar days, or all the days since your licensed health care practitioner certified you as chronically ill.

Short-term care elimination periods can be 0 days, 20 days, 30 days or 60 days.

3. How are benefits paid?

How are benefits paid?

Most policies are reimbursement of qualified expenses from licensed providers of home care, assisted living facilities and nursing homes.

You submit claim forms, along with expenses and are reimbursed for your care costs.

4. How much is paid?

Increasing LTC Costs

How much is paid from your policy depends on the type of plan you purchased, along with your benefit amount.

  • Daily Benefits -generally range from $50-$300 per day
  • Benefit Periods -are generally – 100, 180, 200, or 360 days

The maximum benefit of a short-term care reimbursement insurance policy is usually described as a “pool of money”. This is determined by how much daily benefit is purchased multiplied by the benefit period.

For example, if you bought $200 per day on a 360 day plan, the insurance company may multiply $200 x 360 days and your initial pool of money would be $72,000.00.

They would initially pay for care up to $200 per day until the $72,000 is exhausted, even if it lasted longer than 360 days.

Your Plan May have included Inflation:

Inflation Protection – riders that allow your insurance protection to grow over time and maintain its integrity until you need it.

Types of inflation:

  • 5% Simple - grows the daily or monthly benefit and the maximum benefit at 5% of the original amount, forever, benefits will double every 20 years.