Is a Cash-Benefit Health Insurance Policy Right for You?
Many years ago, most long-term-care insurance policies were deemed to be “reimbursement” plans. This meant that policyholders would receive a reimbursement amount of benefit dollars – up to certain policy limits – for the actual amount that was spent on qualified covered services.
Today, however, there is a new trend in long-term-care plans – cash benefits. With these types of policies, an insured will be sent a check from an insurance company for the amount of covered monthly benefit on the policy, regardless of the actual amount that will be spent on care.
In fact, in some cases, as long as the policyholder qualifies for benefits, the cash may or may not even need to be spent on care at all. With these plans, unlike with traditional long-term-care insurance policies, there is no list of covered benefits or services, as there is no requirement that receipts be submitted to the insurance company.
It is important to note that such cash policies should not be confused with the indemnity type of long-term-care insurance. With an indemnity policy, benefits will be paid out after the costs of care are incurred. Here, the policyholder will be paid a specific amount of daily benefit. However, the payment is contingent upon proof of payment by the insured for covered long-term care-related services. Therefore, if no care is received in a given month, then the insured would not receive a check from the insurance company.
Cash benefit long-term-care policies are offering a new choice to policyholders. With these types of plans, insureds have much more flexibility in how they receive care as well as how to use their benefit dollars.