Can a long-term care insurance policy pay a relative to care for you?

It depends upon the policy.

Most long-term care policies are “reimbursement” policies.  A “reimbursement” policy will only pay benefits after you’ve received care from a “qualified care provider.”

With most “reimbursement policies”, a relative cannot be a “qualified care provider”.

Under certain conditions, there are some “reimbursement policies” that can pay benefits for care you receive from a relative:

  1. Your relative must be a regular employee of the organization that is providing your care.
  2. The insurance company will not pay your relative directly.
  3. The insurance company will pay the organization that employs your relative.
  4. Your relative would only receive their regular wages from the employer.

Some long-term care insurance policies are “cash policies”.  A “cash policy” will pay the policy’s full benefits to you each month regardless of who is providing your care.  You can pay anyone to care for you with the benefits from the “cash policy”.

“Cash policies” are certainly more flexible than “reimbursement policies”, but they are also more expensive.  When comparing similar benefits, a “cash policy” may cost twice as much as a “reimbursement policy”.

Some insurers have developed affordable reimbursement policies that also include a limited amount of “cash benefits”.  There are 3 types:

  1. Some “reimbursement policies” will pay a portion of the benefits “in cash” each month.  You can do anything you want with the “cash benefits.”  The percentage of the benefits that is payable as a “cash benefit” each month ranges between 10% to 50%,depending upon the policy.
  2. Some “reimbursement policies” will pay the full Daily Benefit for each day that you receive even just a small amount of care from a “qualified care provider”.  You can choose to use a small portion of the Daily Benefit to pay the “qualified care provider”.  The remainder of the Daily Benefit can be used anyway that you want to, including paying a relative who may be providing most of your care.
  3. Lastly, there are some “reimbursement policies” that give you the option, at the time of claim, to receive a smaller amount of the benefits in cash, in lieu of receiving the full benefits.  For example, if your “reimbursement policy” has a $6,000 Monthly Benefit, at the time of claim, you can choose to receive 40% of the Monthly Benefit as a “cash benefit” ($2,400).
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