How Are LTC Benefits Paid?


Long-Term Care insurance policies are not standardized. Companies sell policies that combine benefits and coverages in many different ways. Carriers usually pay benefits with one of three methods (Expense-Incurred, Indemnity or Disability).

Expense-Incurred Method: When this method is used, the insurance company must first determine if you are eligible for benefits and if your claim is for eligible services.

  • The long-term care policy will pay benefits only when you receive eligible services.

  • Once you have incurred an expense for an eligible service, benefits are paid either to you or your provider. Bills must be submitted by you or your provider.

  • The coverage will pay for the lesser of the expense you incurred or the dollar limit of your policy. Dollar limit will be calculated Daily or Monthly depending on the product and benefit chosen.

  • Majority of the LTC policies bought use the expense-incurred method.

  • Least expensive of the three methods when similar benefits are chosen.

Indemnity Method: When this method is used, the insurance company only needs to decide if you are eligible for benefits and if the services you are receiving are covered by the policy.

  • The benefit is a set dollar amount…it is not based on the specific services received or on the expenses incurred.

  • Once the company decides you are eligible and you are receiving eligible long term care services, the company will pay that set amount directly to you to the limit of the policy.

  • Bills do not need to be submitted.

  • Usually more expensive than Expense-Incurred Method.

Disability Method: When this method is used, you are only required to meet the benefit eligibility criteria.

  • Once you meet the eligibility criteria, you receive your full daily benefit, even if you are not receiving any long-term care services.

  • Most Expensive Benefit Structure of the three.

Each insurance company will have a different process for handling claims. Ask your representative for a claims process brochure. This brochure will explain what is required at the time of claim and how to proceed.


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