Which statement about expense incurred method for Long Term Care benefits is correct?

• A. It pays benefits based on actual expenses incurred
• B. It pays a fixed daily rate irrespective of cost
• C. It reimburses only after a deductible is met
• D. It pays a capped annual amount regardless of costs

Answer: (A)

This question hinges on how Long Term Care benefits are paid under the expense-incurred method. Under this approach, benefits are reimbursed based on the actual expenses you incur for covered care, up to the policy’s maximums (like daily or monthly limits) and any applicable waiting periods. Documentation, such as provider invoices or receipts, is used to determine the payout, so you’re reimbursed for what you spend rather than a fixed amount regardless of cost. This is different from paying a fixed daily rate regardless of what care costs (that would be an indemnity approach). It’s also not about a deductible needing to be met before benefits begin, which would imply a waiting period rather than expenses actually incurred. And while plans may cap total benefits, the defining feature of the expense-incurred method is that payments align with the actual expenses incurred up to those caps.