LONG TERM CARE INSURANCE

IT PAYS TO KNOW THE BASICS

Long Term Care Insurance:

It Pays To Know The Basics

Long Term Care Is Needed When A Person

Can’t Perform Essential Activities Of Daily Living (ADLs).


Tax-Qualified Long Term Care Insurance


  1. Tax-Qualified Long-Term Care Insurance Policies have 6 Activities of Daily Living (ADL) needs qualifiers (called “triggers”):

  2. 1.    Bathing

  3. 2.    Dressing

  4. 3.    Eating

  5. 4.    Toileting

  6. 5.    Incontinence

  7. 6.    Transferring  (help moving to/from a bed, chair or vehicle)


  1. Additional Triggers for LTC benefits coverage include Alzheimer's Disease, dementia or organic brain diseases.


  1. Tax Qualified Long-Term Care Insurance policies only require the need for help with two ADLs before triggering pay-out of benefits.


  1. The Biggest Potential Benefit of Tax-Qualified Policies is that they are tax-deductible.  The government has guaranteed that Tax Qualified Long Term Insurance policy benefits will not be taxed. The older you are the more you can deduct. 
    http://www.AsYouAge.com/



Non-Tax-Qualified Long Term Care Insurance


  1. In addition to the 6 Activities of Daily Living listed above, Non-Tax Qualified Long Term Care Insurance policies add the ADL of “ambulating”, (the ability to move around - walk - by yourself without assistance) as a trigger for pay-out of LTC benefits. 


  1. Alzheimer's Disease, dementia or organic brain diseases are also triggers for LTC benefits coverage.


  1. One possible downside of Non-Tax-Qualified LTC policies is that, while the addition of the ambulating trigger may seem an added advantage, many Non-Tax Qualified policies require assistance with 3 ADLs before being eligible for LTCI benefits.


  1. Another possible problem with Non-Tax Qualified policies is that they are usually not deductible as a medically related expense.

    - Non-Tax Qualified policy benefits may become taxable income in the future and the benefits you receive could even be taxed retroactively!

    - You may end up receiving 10's to 100's of thousands of dollars worth of benefits that the IRS may consider "income" - retroactively - sometime in the future. That is the scariest part of Non-Tax-Qualified Long Term Care Insurance policies. 
http://www.AsYouAge.com/

 

FREQUENTLY ASKED QUESTIONS 

ABOUT LONG TERM CARE INSURANCE


What Are My Choices In Long Term Care Insurance?

Most Long Term Care policy decisions revolve around three benefit pay-out choices

  1.     (1)    Setting of Care

  2.     (2)    Benefit and Elimination Periods 

  3.     (3)    Inflation Protection (a wise but potentially costly choice)


  4. Be sure to read the entire agreement and understand all the wording and terms of any policy you consider.  If you need to, ask for help before signing any Long Term Care Insurance (LTCI) policy or contract.



Where Might You Need Long Term Care?


What types of care environments are covered?

  1. Facility Only Policies cover care received in a licensed Assisted Living or Skilled Nursing Facility, but not for care received in your home or in non-licensed care settings.

  2. 100% Integrated Home Care Policies cover care received in a licensed Assisted Living or Skilled Nursing Facility as well as in non-licensed settings and home care.

What Benefits Choices Are There For Long Term Care Insurance Coverage?


How much insurance coverage (daily benefits) will you need?

  1. The maximum daily benefit can be from $50 - $400
    LTCI policies can pay out on a per day basis or in weekly amounts


How long will your policy pay for your Long Term Care?

  1. LTCI benefit periods can be for 2, 3, 4, 5 or unlimited years

  2. Many LTC policies cap off at a maximum of around 5 years.

Is there a waiting period before benefits begin to pay?

  1.   You can choose how long you wait before your coverage kicks in.

  2.   The Elimination Period (waiting period) can be for 0, 20, 30, 60, 90 or 100 or more days.

  3.   The longer the elimination period, the lower your premium will be.

  4.   It’s up to you to determine how long you can afford to wait before your policy starts to pay. If you choose a longer elimination period, make sure you have the savings or assets to cover that period of care.


What about increases in inflation or cost of living?

  1.   Most quality LTCI policies include inflation protection. 

  2.   Inflation protection Increases the dollar value of your benefit each policy year.

  3.   Standard inflation protection is 5% Annually Compounded or 5% Simple Inflation.

  4.     - 5% Compounded is recommended for people under 70 years    

  5.             of age in order to keep up with the 6% inflation that is    

  6.             currently being experienced in the health care sector.

  7.     - Many individuals age 70-80 choose 5% Simple Inflation

  8.     - Most people over 80 choose not to pay for an Inflation Rider,    

  9.             because it might not be needed.

  10. Inflation Riders increase the premium price considerably for regular LTCI policies; but considering the rate of inflation, not buying one at a younger age is risky.

 

How will the Long Term Care policy pay out benefits?

  1.   There are two common LTCI policy pay-out structures     

        (1) Reimbursement

        (2) Indemnity.

  1.   Reimbursement pays you for care costs up to the amount of your daily or weekly benefit.

  2.     - These policies can have wording that restricts your care to    

  3.             state licensed facilities or licensed Home Health Care    

  4.             agencies.

  5.     - They also require you to pay up front for your care, then be    

  6.             reimbursed once they have determined that your care is    

  7.             being provded in the manner stated in the policy.

  8.     -  Because of the above restrictions, Reimbursement policies are    

  9.             usually less expensive.

  10.   Indemnity pays out the maximum benefit up front and allows you to spend it as you please.

  11.     - This is the type of policy to buy if you want your friends or    

  12.             relatives to get paid to take care of you.

  13.     - Indemnity policies are more expensive.



What is excluded in Long Term Care Insurance policies?


  1.   Every Long Term Care insurance policy has exclusions.

  2.     - Some states do not allow certain exclusions                          

  3.     - The Federal LTCI Program's policies have fewer exclusions        

  4.             than other program offerings.

  5.   Many Long Term Care insurance policies have exclusions for

  6.     - Mental and nervous disorders/diseases (except organic brain        

  7.             disorders, such as Alzheimer's)

    - Attempted suicide or self-inflicted injury

    - Alcoholism and/or drug addiction

    - Long Term Care needs caused by an "Act of War

  1.      - Treatment paid for by government agencies such as the VA or    

  2.             Medicare

  3.      - Long Term Care needs caused by an "Act of War


   

What other LTCI points should I consider?


  1.   Assess your need for Long Term Care Insurance by weighing

        (1) Your desire to receive quality care by staying off of Medicaid        

  1.           and to protect your loved ones from financial hardship or

  2.           caregiving burdens.

        (2) The assets you wish to protect, and

        (3) Your ability to pay your premiums, even if they increase*


  1.   Understand how much your premium will be and how often it must    

              be paid.

  1.       - Your premium may increase after your purchase - not due to       

  2.          your age or health, but due to the insurance company's need    

  3.          to adjust their rates due to a higher than expected percentage    

  4.          of claims. 
    http://www.AsYouAge.com/


  5. source:  LongTermCareInsurance.org

 

Long Term Care Insurance offers specifically defined benefits coverage for necessary medical or personal care services provided outside of a hospital setting, such as in a nursing home or in the insured's home.

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As You Age

Long Term Care Insurance: It Pays To Know The Basics

The content on AsYouAge.com is provided as a courtesy for our site visitors. The information, resources, links, advertisements and other material on AsYouAge does not constitute a professional opinion or advice; nor does it constitute an endorsement of any organization or the information, products and/or services they may offer.

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