Long-term care insurance in South Dakota:

What factors and features must be considered

when deciding whether or not to purchase the coverage?

Karen Paige Hunt

 This site offers a broad presentation of information about long-term care insurance. 

It is not an attempt to endorse the purchase or to give legal advice.

            Long-term care insurers are quick to point out that two out of every five people will need some kind of long-term care during their lives.  In trying to make their sales, they may also point to figures that show most people insure their home and cars against damage or loss, or purchase a policy to pay medical expenses, when the odds of using the coverage provided by that insurance are much less – 1 in 1,200 will use the benefits of their home insurance, 1 in 250 will use their car insurance and 1 in 15 will use their health insurance.[1]

            However, individuals must look carefully at their own situation to determine whether they wish to take the risk of spending the money for coverage they hope they will never need or, in the alternative, the risk of foregoing the purchase of long-term care insurance coverage only to be faced with the financial crisis of determining how to pay for care when the need develops.

            There are many issues to be considered when contemplating the purchase of long-term care insurance.  One must identify and prioritize both values and financial goals in making the decision to invest in the coverage.  Would purchase of such a policy be reasonable given the circumstances?  Is it the right time to purchase the coverage?  Which of the various features available through such insurance policies will maximize the benefits?  The following pages may be of assistance to those facing this decision process, by offering a general review of those factors and policy features that must be considered before the premium is paid, with recognition of the impact of South Dakota laws and regulations on long-term care insurance consumers in the state.

Why get long-term care insurance?

            Decisions about whether or not to purchase long-term care insurance and what kind of insurance to buy, must be based on a realistic assessment of what programs are available and a thorough review of each individual’s situation, to include full consideration of assets, income, goals and expectations.  

Insurance serves as a mechanism for preservation of assets, rather than allowing long-term care to strain retirement incomes and drain lifetime savings.

            People today live longer but are reluctant to face the reality that some of their final days may be spent in a setting that provides some level of long-term assistance or medical care.  A 1993 poll found that seventy-six percent of Americans believe they will never need any type of long-term care.[2]  However, the odds of a man over sixty-five years of age needing long-term care is one in three and for a woman that figure is one in two.[3]  It is anticipated that by 2020, the number of people who need long-term care will reach between 10 and 14 million and that number will increase to between 14 and 24 million by 2060.[4]  In addition, fifty-five percent of those who need nursing home care will stay at the facility at least one year and twenty-one percent will stay five years or longer.[5]   The average cost for that year-long nursing home stay may exceed $40,000. 

It has also been recognized that many Americans incorrectly believe they have some coverage for long-term care expenses, either through governmental programs or through existing health care policies.[6]   There is limited federal and state assistance available to provide for long-term care bills.   Medicare provides for medical expenses for those over 65 years of age.  However, the long-term care provided under Medicare is limited to 100 days of skilled nursing home care, if the care is prescribed by a physician and follows a three-day hospitalization.  Medicare provides for only nine percent of the costs associated with nursing homes.[7] 

 Medicaid, on the other hand, provides for about fifty-two percent of nursing care services.  In order to qualify for Medicaid, the individual’s resources must be depleted to a certain level, which may impact the income and assets available to the spouse remaining in the community.[8]

             But more and more people are realizing that they do not have coverage and will need assistance to pay for the required care and services as they age and their health begins to fail.  According to the Health Insurance Association of America, the number of individuals who have bought long-term care insurance increased from 1.9 million in 1990 to 6.8 million in 1999.[9]

             Those who purchase long-term care insurance may benefit from a tax advantage.  At the current time, the premiums may be deductible for federal, and in some cases, state income tax purposes.  Congress has considered legislative changes to allow this benefit even if the individual does not itemize the deductions for medical expenses.[10]  

             The acquisition of long-term care insurance provides those insured with some assurance that they will be able to minimize dependence on other family members while at the same time avoiding the necessity of relying on public assistance.   Finally, long-term care insurance can offer its beneficiaries some level of control over where and how their long-term care will be provided. 

What factors must be considered in selecting a long-term care insurance policy?

            Those considering long-term care insurance will need to determine if long-term insurance is a good product given their personal circumstances, from whom they will buy the policy, and what specific features they will need to have adequate coverage. 

             Consideration must be given to the age of the applicant.  The average age of an individual who purchased long-term care insurance in 1999 was sixty-five.[11]  Premiums for coverage will be higher for those applicants who are older.  Conversely, younger insured people will pay the premiums for a longer period of time before they will utilize the benefits.  Average premiums in 1999 ranged from $300 a year for a forty-year-old to $1,002 for a sixty-five-year-old.[12]  Another issue is that coverage may be limited or denied if the applicant who waits to purchase the coverage develops an illness in the interim.  Age is also a factor in determining which features of the policy would represent good investments – for example, an older person may opt to purchase coverage that offers higher benefits rather than inflation protection, as explained below.

             When assessing what financial circumstances warrant the protection of long-term care insurance, it has been suggested by one source that those individuals with assets of more than $75,000, not including the home or cars, and annual income of $25,000 to $35,000, should purchase the coverage.[13]  Others may recommend the purchase the individual’s assets are between $100,000 and $200,000.[14]

 Before purchasing long-term care insurance, an individual must consider the current impact of buying such a policy and what may happen if such coverage is not available.  If the payment of premiums will require the individual to lower his or her standard of living or to forego necessities of life, such a policy may not be a good idea.  If payment of premiums would present difficulties if the individual’s financial circumstances changed or if the premiums increased, again, such coverage may not be desirable.  The individual also needs to consider how long their savings and other resources would last if faced with annual expenditures for long-term care.  That calculation would determine how long it would take to become eligible for Medicaid if insurance benefits were not available and how that required spend-down would impact a spouse or the individual’s estate.

            There are options to long-term care insurance as well.  Some individuals have such limited resources that qualification for Medicaid will not sufficiently affect their estate.  Others may have the private resources to pay for long-term care out of pocket.    Still others may opt to buy into a residential “life care” community that allows an individual resident to move through a continuum of living arrangements from individual apartments to nursing home care as the needs for care change.  Some life insurance policies, or their riders, provide an accelerated, or living benefit for long-term care through which either a percentage or the full amount of policy benefits can be paid out when the need for long-term care develops.  Finally, some policies that offer disability income coverage may be converted, with no increase in the premium to a long-term care policy when the insured reaches age sixty-five.[15]

            Long-term care insurance may be available directly through insurance agents, or from financial planners, banks and large membership organizations, such as fraternal societies or senior citizens organizations.  Some employers offer long-term care insurance, either as a stand-alone policy or as a long-term care rider to a health insurance policy.[16]  The federal government recently joined the list of employers who provide this benefit to its employees.  Beginning March 25, 2002, some 20 million people, to include current federal employees, military personnel, retirees, survivors, spouses and certain family members, can begin applying for long-term care coverage, for which they will pay the full cost without government contribution but with the benefit of a government contract.[17]

            It is important to shop for long-term care insurance, not only to ensure that the appropriate coverage is acquired, but to be sure that the company providing the coverage will be able to provide the benefits the individuals needs.  Some 124 companies offered long-term care insurance policies in 1999.[18]  But recent news reports show that some insurance companies have encountered problems with this product.[19]  Ratings of the companies and their policies are available from A.M. Best Company, Standard and Poor’s, Duff and Phelps Credit Rating Company, Moody’s Investors Service, Fitch Ratings, and Weiss Research.[20]

Features of long-term care insurance

            It is important that those who purchase long-term care insurance make the decision based on their individual goals and anticipated needs, not on price of the product alone.  The policies offer a variety of features and options that may or may not be appropriate given the individual’s circumstances.

            To assist with that process, South Dakota law requires that an applicant be provided with an outline of coverage for the individual long-term care insurance policy.  The outline will include a description of the benefits and coverage, as well as a statement of exclusions, reductions and limitations, and information about renewal.  The outline should also state it is merely a summary and the policy must be consulted for specific contractual obligations of the parties.[21]  While this provides an overview, it is important to read the entire policy before any purchase is made.

The law also requires a “free look” period, in which a potential purchaser of long-term care insurance in South Dakota has the right to return the policy within thirty days and get a refund if unsatisfied with the stated coverage for any reason.[22] 

When discussing the coverage with the sales agent and reviewing a policy, it will be helpful to know what features may be available and would best apply to the individual’s circumstances.  The following features may be standard to long-term care insurance policies or may be offered as riders that allow an individual to purchase additional special coverage.

Does the policy provide for a full range of long-term care services? 

            Long-term care is provided not only in the nursing home setting, but in assisted living facilities, adult day care centers and in the home.  Ninety-five percent of those individuals who require long-term care need custodial care, such as assistance with activities of daily living (ADLs) – bathing, dressing, toileting, maintaining continence, transferring and eating – with the average period of care being two to three years.[23]   Approximately 4.5% of the care provided is intermediate care, involving licensed care providers on an intermittent basis, with stays of two to three years, while 0.5% of the care is skilled care which is medically necessary but involves an average stay of only seventeen days.  It is estimated that less than one quarter of all long-term care is provided in nursing homes.[24]

            One needs to consider what kinds of services they would like to have covered by a long-term care insurance policy.  In South Dakota, the insurer cannot limit coverage only to a skilled nursing home, nor can it provide significantly more coverage for skilled care than for a lower level of care.[25] 

            South Dakota requires long-term care policies to include benefits for assisted living centers with the minimum benefits being payment of daily amounts of not less than half that provided for care in nursing facilities.[26]  An assisted living facility is defined by South Dakota law as an institution that can care for five or more individuals by providing round-the-clock services for those who are unable to perform ADLs or suffer from cognitive impairment.  This includes providing full-time staffing, three meals a day, arrangements for medical services when necessary and administration of medication.[27]   In South Dakota, assisted living facilities may be operated either by non-profit or for-profit organization and may be either a small family-style living arrangement or a larger complex.[28]  Assisted living costs nationwide can range from $900 to 3,000 a month depending on the facility and the services provided.[29] 

            Adult day care is a service that allows individuals to continue living in their homes but to spend their days in a care setting.  Typical benefits of adult day care include supervision, nursing care, assistance with ADLs and organized activities with therapeutic, social and educational purposes.[30]  These services cost about $45 a day.[31]

            Unquestionably, most people would prefer to remain at home as long as they can.  However, a full day of services from a home health care aid cost about $110.[32]  Long-term care insurance may be the only way that an individual can afford to pay for the services that will allow him or her to delay the move to an assisted living setting or a nursing home.   Some policies may provide for payment of family members or friends who provide home health care.[33] 

Home health care services covered by long-term care insurance in South Dakota must provide for services that are prescribed by a physician, offer assistance with ADLs or supervision for those with cognitive impairments or provide therapy, nursing services, or other medically necessary services.[34]   Policies that provide for home health care, or community care services, must provide total coverage that equals at least one-half of the annual coverage available for nursing home benefits.[35]  The home health care benefit for long-term care policies in the state must provide for 365 days with a maximum daily limit of $25.[36]

Other policies may offer coverage for hospice care, respite care (which provides for a temporary period of care in order to allow the primary caregiver a vacation from that responsibility), medical equipment, ambulance transportation to and from a nursing home or hospital, prescription drugs administered in the nursing home and bed reservations if an individual must leave the nursing home for a period of acute care.[37]

When considering options that may be available regarding the level of long-term care provided, the insurance purchaser should consider what resources are available in the community and specifically what might be available to the individual.  For example, it has been suggested that in thinly populated areas, such as North or South Dakota, it may be difficult to get home health care in the remote rural areas.  For that reason, some individuals suggest that a rider providing this coverage may not be a good investment.[38]  It is important to know what services are provided in the community, what they will cost, and how one might anticipate their long-term care needs will ultimately be met.

How are the benefits paid?

            Policies may provide benefits on a daily basis, with choices ranging from $50 to $120 a day.[39]  Higher daily benefits will result in higher premiums.  Some policies may provide a monthly benefit of $3,000 to $9,000.[40]  The advantage of a monthly benefit is that while the charges for a day with a high level of care will exceed the daily payment allowable, it would still be covered under the monthly benefit.[41]  Some policies may base their method of payment on the “reasonable” costs of an area.[42]  

            Policies will also differ in whether they provide benefits to indemnify or reimburse the insured.[43]  If the policy indemnifies, the policyholder gets the benefit regardless of what is spent, which may allow for money for incidental costs of an institutional stay.  If the policy reimburses, the funds not spent on a given day can be carried over to extend the benefits.[44]

            Decisions about policy payment rates should be based on an assessment of long-term care costs in the areas, what premium can be afforded, realistic consideration of how much the insured can pay for such care and how well each benefit fits the anticipated needs of the individual.[45]

What is the benefit period?

            The beneficiary can adapt the policy to allow for nursing home coverage for a period ranging from two years to a lifetime.   Most consumers elect coverage for a period of time between four and six years, knowing that the average stay in a nursing home is two and three years.[46] 

How does the policy address pre-existing conditions or other exclusions?

            Long-term care polices may not provide coverage for illnesses that existed at the time of application.  However, the Health Insurance Association of America reports that nine of the top ten sellers no longer have a pre-existing condition limitation as long as the pertinent medical conditions are disclosed at the time of application.[47]  Other policies may provide coverage as long as the illness was disclosed.  There may be other requirements, such as a waiting period of six months before coverage for pre-existing conditions is provided.

            South Dakota law requires that policies define pre-existing conditions and that the definition be no more restrictive than “a condition for which medical advice or treatment was recommended by, or received from a provider of health care services, within six months preceding the effective date of coverage of an insured person.”[48]  Policies available in the state are required to state any limitations based pre-existing conditions in a separate labeled paragraph in the policy.[49]  The policy will specify those conditions that provide for automatic disqualification and those conditions that might disqualify an applicant.[50]  The insurers are allowed to establish a six-month post-purchase waiting period in which they can limit or reduce benefits if the need for long-term care results from a newly developed condition.[51]  The law specifically prohibits the insurer from excluding coverage for a condition that occurs more than six months following the effective date of the insurance coverage.[52]

            In South Dakota, exclusions from coverage may be based on, among other things, acts of war, suicide or self-inflicted injuries; alcoholism or drug abuse; mental or emotional disorder; pre-existing conditions; mental or nervous disorders, with the exception of Alzheimer’s disease; and work-related injuries for which there is workers’ compensation coverage.[53]  South Dakota law requires coverage of Alzheimer’s disease or senility.[54] 

Is there a period of time for which the insured will be liable for the nursing home payments before the insurance benefits begin?

            This is referred to as the deductible or elimination period.  The policy purchaser may be able to specify whether the coverage will begin with the first day of the long-term care, or, for a reduced premium, the insured will agree to pay for a period of care before the insurance payment of the bills begins.  The policy’s elimination period may be cumulative with each period in the long-term care facility counting towards the deductible or non-cumulative with no credit given for days spent in the facility on previous occasions.[55]

            South Dakota’s insurance regulations mandate that the elimination period for each confinement cannot be more than 100 days if the coverage is provided in a long-term care insurance policy or one year if the coverage is part of an insurance rider.[56]  Decisions about the length of an elimination period should be based on what resources would be available to allow an individual to cover the initial costs of a long-term care stay.

Does the coverage require prior hospitalization before benefits can be received?

            Some older policies may require an in-hospital stay as a prerequisite for coverage of a nursing home stay.  The newer policies will require only a physician’s certification that long-term care is appropriate.[57]

            South Dakota law specifically prohibits policies sold in the state from making prior hospitalization a requirement of eligibility for benefits.[58]   Nor can they condition eligibility to receive institutional care on the requirement that the individual received a higher level of institutional care prior to the current incident of care, for instance, making a move from a nursing home to a assisted living facility.[59]  However, non-institutional benefits may be conditioned on the prior receipt of institutional care, but the insurer may not require that the stay extend more than thirty days.[60]

Standards that may be allowed to trigger benefits are specifically stated in South Dakota regulations.   A physician’s recommendation that care is necessary based on an illness, injury or infirmity may be the trigger, but benefits cannot be conditioned on medical necessity.  Medical necessity may, however, be an additional benefit trigger.  The payment of benefits must be based on an assessment of and the inability to perform three of the six ADLs or presence of cognitive impairment.   The policy cannot require that a reported inability to perform be more restriction than requiring hands-on assistance of another individual to perform the ADLs or requiring supervision or verbal cues of an individual with a cognitive impairment by another person for the protection of the insured or others.  The assessment must be provided by a doctor, nurse or licensed social worker.  Other provisions may be used to determine when benefits are payable but may not restrict or replace the above-stated standards.[61]   

Are the premiums waived while an individual is receiving benefits?

            Some policies contain provisions through which the policy remains in force for those periods when the insured is in receipt of long-term care.  This allows the insured to use the money that might have been spent on the premiums to meet the other personal and household costs that will be incurred during a period of care.[62]  Some policies waive the payment upon the first day of long-term care while others may require a period of care, most frequently ninety days, prior to the waiver.[63]

Is the policy tax-qualified or non-tax-qualified?

            If the policy meets the standards established under federal law, a portion of the premium payments will be deductible, based on the individual’s age, for federal income tax purposes as a health care expense.[64]  In addition, the benefits paid under the policy are not considered income.  Approximately eighty percent of the policies purchased in 1999 were tax-qualified.[65] 

Both types of policies can be sold in South Dakota.  The tax-qualified policies have requirements that include certain benefit triggers, establishment of a plan of care and annual recertification.[66]   Specifically, benefits cannot be triggered by medical necessity, but can require that an individual face 90 days with the inability to perform two of the six ADLs.

What role will the insurer play in making decisions about the care provided?

            A policy that is tax-qualified may have additional requirements set by the insurer.  The policy may require some care decisions be made by a care coordinator rather than the individual’s physician.  The treating physician may also be foreclosed from establishing an overall plan of care for which the insurer will pay.  The insurance company may also require certification of the beneficiary’s illness more frequently than once a year as required by federal law.[67]  Individuals may wish to choose features that allow them to work with their own physician in making decisions and completing assessments about their condition and long-term care needs.

Does the policy provide inflation protection?

The cost of a day of nursing home care increased from about $85 to $100 between 1996 and 2000.[68]  Inflation protection features provide for coverage at an adequate rate even if the need does not arise for many years, allowing an increase in benefit levels and benefit maximums.  It is recommended that those under seventy-five years of age purchase this coverage,[69] however, only one third of all long-term care policies sold in the early 1990s included this option.[70]  This may be linked directly to the fact that these inflation adjustments can add between 40 and 140% to the premium.[71]

Inflation protection may be provided as an annual automatic increase in the initial benefit level, a guaranteed right to increase the levels of benefit on a periodic basis without the requirement of providing evidence of continuing insurability or allowance of a specific percentage of actual or reasonable charges.[72]  South Dakota requires that policies include this option[73] and allows cost-of-living adjustments based on either the medical care component of the federal consumer price index or a fixed increase of between five and ten percent.[74]  The most common protection allows for an automatic five percent benefit increase each year.[75]   

The guaranteed purchase option allows an individual the opportunity to buy additional benefits at specific intervals.[76]  The inflation protection may increase benefit amounts either at a simple or compounded rate.   The premium increase for the purchase of the simple-rate option on an average policy would be about fifty percent, while the compounded-rate option will double the premium payment.[77]  Some policies will limit this protection either to a specific period of years or until the insured reaches a specified age.[78]

 As nursing home costs are anticipated to maintain a rapid growth, historically rising by about six percent each year,[79] the availability of inflation protection may be an important feature to those who anticipates their need for coverage will not occur for several years.   Opting not to purchase the this feature may be a good decision for those who are more advanced in age and would expect the need for care to occur in the relatively near future.

Is renewability guaranteed?

            Under the law, polices must be guaranteed renewable,[80] providing that the coverage cannot be cancelled as long as the premium payment is being made.  South Dakota specifically prohibits a policy from being cancelled or nonrenewed based on the age or medical condition of the insured.[81]  The law states, in addition, that an insurer has no right to change the policy provisions or riders while the insurance is in force.[82]  Adjustments may be made in the premiums for a class of insureds with the same policy, subject to approval by the South Dakota Division of Insurance.[83]

             It should also be noted that South Dakota regulations require that insurers provide for reinstatement of coverage if the lapse in premium payments occurs as the result of a cognitive impairment or loss of functional capacity.[84]

Can I specify that a third-party be notified if the premiums are not paid?

South Dakota regulations require companies to offer, as an option, that the applicant designate at least one other individual who will be notified if the policy lapses or is terminated for nonpayment of premiums.[85]  While this does not give that third person any liability for the services provided by the policy, it does allow that individual to become involved if the insured fails to make payments due to a physical or mental impairment.  This designation can be waived when the policy is purchased.[86] 

Does the policy include non-forfeiture protection?

            This feature provides that the insured will not lose all of the benefits if the premium payment stops.  A policy with non-forfeiture protection will provide either full daily benefits but for a shorter period of time than specified in the original policy or the company will pay a lower benefit than specified in the original policy.[87]  Tax-qualified policies are required to provide this protection and many state regulators also have this requirement.

            This is recognized as an expensive protection, which will add thirty to fifty percent to the price of the policy.[88] 

Can the premium be returned if not used during the insured’s lifetime?

            Similar to a non-forfeiture clause, the return-of-premium provision allows the individual or the estate to receive a refund of the premium if policy is not used during the lifetime of the insured.[89]  Depending on the individual’s circumstances, this option may not be a good investment, as the provisions actually remove funds available for claim payment of those retaining coverage and increase the premium.[90]

Is a shared-benefit coverage available?

When a husband and wife purchase long-term care insurance policies together, some companies will allow either to draw from the spouse’s policy if their own benefits are exhausted.[91]

Other things the consumer should know about sale of long-term care insurance policies

            In addition to the feature mandates provided for sales of long-term care insurance made in South Dakota, the regulations also specifically prohibit the utilization of certain sales tactics when dealing with these policies.  An agent may not be involved in “twisting” or knowingly misrepresenting policies or insurers in order to persuade an individual to drop one policy or buy another policy.[92]   High-pressure tactics, or the use of “force, fright, explicit or implied threats, or undue pressure,” to induce a sale are prohibited.[93]  Finally, “cold lead advertising” may not be used, meaning an agent or company must disclose its identity and let the consumer know that the contact is being made for the purpose of selling an insurance policy.[94]

            In South Dakota, if the applicant for long-term care insurance is eighty years of age or older, the insurer has an additional obligation, and must obtain either a physical examination, an assessment of functional capacity, an attending physician’s statement or a copy of the individual’s medical records before the policy can be issued.[95]

The option of replacing an existing long-term care policy

            Those individual who have purchased long-term care insurance in the past may want to consider the possibility of a replacement policy.  The newer policies offer more benefits, such as a fuller range of covered services and inflation protection.[96]  Some restrictions used in older policies are no longer allowed, such as the requirement for pre-care nursing home stays and coverage of nervous disorders.[97]   However, replacement may not be an option for those have developed health problems and may be unaffordable when considering the premiums paid on a policy purchased when the individual was sixty years old and one being considered for purchase today by a seventy-year-old.

Insurance regulations in South Dakota require that applications for long-term care coverage include questions about whether the new policy will replace existing coverage.[98]  Once the insurer determines the sale involves a replacement policy, it is required that the applicant be provided with notice that indicates the agent believes the new policy will improve the insured’s position.[99]  The required notice also specifies that (1) a preexisting condition may not be immediately or fully covered under the new policy; (2) the new policy cannot recognize new preexisting conditions or probationary periods; (3) it might be in the consumer’s best interest to seek information from the existing insurer; and (4) all questions in the application must be answered truthfully or the company may have grounds to deny future claims.[100]  The replacing insurer also must notify the existing insurer that the policy may be replaced.[101]

In addition, in South Dakota, if a new long-term care insurance policy is written by the same insurer, or an affiliated company, the new coverage must include a waiver of any time periods – those applying to preexisting conditions, waiting period, elimination periods, etc. -- which had been met under the initial policy.[102] 

Conclusion

             It is important to remember that the future holds the risk of circumstances which may necessitate that an individual receive long-term care, either based on the need for medical services or the need for assistance with personal care and general tasks of general living.   When it becomes too great a task for the individual or immediate friends and family members to provide that care and assistance, the necessary services are available.  However, these come at a cost. 

            How will these costs be met when that time comes?  In some situations, the individual has the savings and income to pay for long-term care that may last for years and cost tens of thousands of dollars.  In other cases, family members can pay these bills.  However, not all families have the resources to pay these costs.  In still other cases, federal assistance will be available.  The federal programs will pay for the care in only limited situations, and may require that an individual expend his or her own resources before that assistance becomes available.   Thus, the option of long-term care insurance must be considered.

             The decisions regarding whether or not to purchase long-term care insurance should be made only after an individual has made a careful and realistic assessment of (1) the rationale for considering the coverage; (2) the financial resources which may be available, to include assets and income from the individual, as well as possible assistance from family members, federal and state programs, and other insurance sources; (3) the impact the expenditure for long-term care insurance premiums may have on the individual’s current living situation; and (4) the person’s age and general health condition. 

            If the individual decides long-term care insurance will be a good investment, the process of finding the right policy begins.  Long-term care insurance policies offer a variety of features and the appropriateness of the various options of benefits depends a great deal on the individual’s personal circumstances and the insight gained through answering the questions about why such coverage might be purchased, the resources available to make the purchase and what needs might be anticipated in the future based on the person’s age and health.   Consideration must also be given to finding the right company to provide the coverage.   

A basic understanding of such policies, as well as why the coverage may be important in some circumstances and what features can maximize the benefits, will allow an individual to move towards acquiring the appropriate insurance to guarantee that they should not have to spend their final years worrying about how the bills for their long-term care will be paid.

For further guidance to one considering the purchase of long-term insurance,

additional information would be available at:

What Consumers Need to Know About Private Long Term Care Insurance

American Health Care Association

http://www.acha.org

1201 L St., N.W.
Washington, DC 20005
(202) 842-4444
(202) 842-3860

Guide to Long-Term Care Insurance

Health Insurance Association of America

http://www.ahip.org/

1201 F Street, NW
Suite 500
Washington, D.C. 20004-1204

(202) 824-1600

Private Long-Term Care Insurance

American Association of Retired Persons

http://www.aarp.org/confacts/health/privltc.html

601 E St., NW
Washington, DC 20049
1-800-424-3410

South Dakota Consumer’s Guide to Long-Term Care Insurance

(September 2002)

Department of Social Services

Adult Services and Aging

http://www.state.sd.us/social/ASA/index.htm

700 Governors Drive

Pierre, SD  57501-2291

(605) 773-3656Dept of Social Services
Services & Aging

Ask the (South Dakota) Division of Insurance

Life/Health Questions and Answers

Division of Insurance

South Dakota Department of Commerce

http://www.state.sd.us/dcr/insurance/consumerinfo/:

118 W. Capital

Pierre, SD  57501

(605) 773-3563

Complaints about insurance go to:

http://www.state.sd.us/dcr/insurance/Complain.htm

A copy of South Dakota’s laws regarding long-term care insurance can be accessed at

http://legis.state.sd.us/statutes/index.cfm.  The regulations are available at

http://legis.state.sd.us/rules/rules/2006C.htm#20:06:21.

South Dakota Department of Social Services

http://www.state.sd.us/social/MedElig/Ltc/index.htm

700 Governors Drive

Pierre, SD  57501

(605) 773-4678

Medicare benefits

Medicare & You 2002

http://www.cms.hhs.gov/medicare/.