3.3 Indiana Disability and Long-Term Care Insurance

No Mandatory State Disability Program

A handful of states (California, New York, New Jersey, Rhode Island, Hawaii) run state disability insurance (SDI) programs funded by payroll deductions. Indiana does not. Indiana is a private-market state, so a worker who becomes disabled relies on:

• Individual disability income (DI) policies purchased privately
• Group DI offered voluntarily by an employer
• Social Security Disability Insurance (SSDI) for those meeting the strict federal definition and work-credit test

Exam trap: When a question contrasts Indiana with California, the right answer is that Indiana has NO state-mandated disability fund. "The Hoosier Disability Fund" is a fabricated distractor.

Uniform Policy Provisions for Disability

Individual accident-and-health/disability policies in Indiana incorporate the NAIC Uniform Individual Accident and Sickness Policy Provisions. The mandatory provisions the exam tests by exact number:

Worked scenario

A policyholder breaks a leg on June 1. She should give the insurer notice of claim within 20 days (by about June 21). The insurer must mail claim forms within 15 days. She then files proof of loss within 90 days. If the insurer wrongly denies the claim, she must wait at least 60 days after proof of loss before filing suit, and no later than 3 years after proof of loss. A producer who tells her she has "only 10 days to file anything" is misstating the Uniform Provisions — a classic trap.

Renewability and Cancellation

Most individual DI is sold guaranteed renewable: the insurer must renew to a stated age (often 65) and cannot cancel for health changes; it may raise premiums only by class, never for one insured. Noncancelable policies go further — neither cancellation nor any premium increase is allowed. The insurer may lapse a policy only for nonpayment after the grace period, or rescind within the two-year contestable period for material misrepresentation or fraud.

Long-Term Care: The 30-Day Free Look

Long-term care (LTC) insurance pays for custodial and skilled care — nursing home, assisted living, adult day care, and home health — that standard health insurance and Medicare largely exclude. Indiana gives individual LTC buyers a 30-day free look (verified in Indiana Code Title 27, Article 8, Chapter 12), printed prominently on the policy's first page. This is three times longer than the 10-day life/health free look — a distinction the Indiana exam tests repeatedly.

Required LTC Provisions

Indiana LTC policies must:

• Be guaranteed renewable (no health-based cancellation)
• Limit pre-existing condition look-backs (typically 6 months)
• Clearly disclose the elimination period (the days the insured self-pays before benefits start)
• Offer (the buyer may decline in writing) inflation protection
• Offer a nonforfeiture benefit so value is retained if the policy lapses
• Cover at least two of six Activities of Daily Living (ADLs) — bathing, dressing, eating, toileting, transferring, continence — or cognitive impairment, as the benefit trigger

Inflation options usually include 5% compound (the strongest), simple inflation, or CPI-indexed increases.

The Indiana Partnership Program — Two Levels of Asset Protection

Indiana pioneered the Long-Term Care Partnership Program. Buying a Partnership-qualified policy lets the insured protect assets from Medicaid spend-down if benefits are exhausted and they apply for Indiana Medicaid. Indiana is notable for offering two protection levels:

Total asset protection is rare — most Partnership states only offer dollar-for-dollar — so Indiana's program is among the strongest Medicaid asset shields nationwide. Only assets, never income, are disregarded at Medicaid eligibility.

Worked example

A client buys a dollar-for-dollar Partnership policy that ultimately pays $250,000 in benefits. When those benefits run out and she applies for Indiana Medicaid, $250,000 of her countable assets are disregarded above the normal Medicaid limit. Had she bought a policy meeting the total-asset threshold, all of her assets would be protected.

Producer LTC Training

Before selling any LTC or Partnership policy in Indiana, a producer must complete an initial 8-hour LTC training course and then a minimum of 5 hours of ongoing LTC refresher training each 2-year renewal period (a producer may instead retake the 8-hour course). The producer must understand Partnership requirements, suitability standards, and required disclosures.

Exam tip: "Indiana has no state disability program" and "LTC free look is 30 days, not 10" are the two single most-tested facts in this section.