3 Steps to Take Before Filing a Long-Term-Care Insurance Claim

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Buyers of long-term-care insurance expect that their policies will pay off if they no longer can live on their own. And most claims are paid: Insurance companies forked over $6.6 billion in benefits in 2012 to a record 264,000 individuals, according to the American Association for Long-Term Care Insurance.

But consumer advocates and lawyers say many seniors—and their families—spend months, and sometimes years, struggling to persuade insurers to pay the bills. To help avoid denials, it's essential to understand what your policy covers and the traps that can block a claim from being paid.

Determine when the clock starts ticking. Policies typically include a deductible, known as an elimination period, of 20, 60 or 90 days. But insurers differ on how they count those days.

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Some policies use "calendar days"—paying for services 60 days after you file a claim or after the doctor or company certifies that you have a covered disability. But other plans focus on "service days," counting only the days that you pay for a home health aide, for example, during the waiting period. If the caregiver visits three days a week, the insurer only counts those visits toward the 60-day waiting period—and benefits won't kick in for 20 weeks. In the meantime, the family has to pick up the tab. Some policies will waive the elimination period for home health care, says John Ryan, a broker in Greenwood Village, Colo., who specializes in long-term care.

Regardless of the particulars of the elimination period, Ryan says it's essential to file a claim at the first sign of a problem. The insurance company will need to review clinical records and perhaps even send a nurse or social worker to visit a client before it approves a claim. "All this takes time," Ryan says.

Pass the disability test. Claimants typically must prove that they are "cognitively impaired" or need help performing two or three "activities of daily living," such as bathing or eating. "A licensed health care provider should confirm in writing" all of the details of the patient's disabilities, says Calvin Thur, a lawyer in Phoenix, who represents claimants in insurance cases. He also recommends that a physician "in essence write a prescription" for home health care seven days a week or nursing-home care for life. When you call the insurer to file a claim, make it clear that you have documentation from a physician.

The physician's report should reflect the type of care required in the policy. For example, Thur says, "If a policy requires that the person needs help getting in and out of the shower, the doctor should write that." The insurer will verify the need for care, either by phone or in person. In the case of a visit, an advocate "should be present to explain the problem," says Glenn Kantor, an insurance lawyer in Northridge, Cal. "The patient should never be left alone."

And the insurer should be told in writing to call the patient's advocate and not the client for any information, Kantor says. Someone with Alzheimer's could have moments of lucidity, for example, and older patients often don't want to admit how helpless they are.

Check the caregiver requirements. Before you hire a caregiver, study the policy's fine print on the type of aide the company will cover. Many policies will only pay for licensed caregivers who work for an agency, even though many patients simply require the help

of a personal care aide—someone to prepare meals and help with bathing. You don't want to discover too late that the aide you hired doesn't qualify. These requirements also cover aides during the elimination period—even though you are paying for the care yourself.

Not all states require such licenses. In Arizona, Thur says, there is no license requirement for home health aides. He says that when the home health providers call the insurers to remind them of the law, "the companies usually back down, but sometimes they don't."

Keep a log of all communications with the insurer. Follow up all phone calls with a letter, fax or e-mail. If the insurer drags its feet or denies a claim, consider hiring a lawyer who specializes in filing "bad faith" claims against insurance companies.

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Susan Garland is the former editor of Kiplinger's Retirement Report, a personal finance publication whose subscribers are retirees and those approaching retirement. Before joining Kiplinger in 2006, Garland was a freelance writer whose work appeared in the New York Times, the Washington Post, BusinessWeek, Modern Maturity (now AARP The Magazine), Fortune Small Business and other publications. For 12 years, Garland was a Washington-based correspondent for BusinessWeek, covering the White House, national politics, social policy and legal affairs. Garland is a graduate of Colgate University.