Long term care insurance
Long-term care insurance, an insurance product sold through a licensed insurance agent (one who represents the insurance company) or an insurance broker (one who represents the policyowner) in the United States, helps provide for the cost of long-term care beyond a pre-determined period.
Individuals who require long-term care are generally not sick in the traditional sense, but instead, are old and frail and unable to perform some of the basic activities of daily living such as dressing, bathing, eating, toileting, getting in and out of a bed or chair, and walking.
As an individual ages, there is an increased risk of needing long-term care. Medicare (United States) will not cover the expenses of long-term care, but Medicaid will for those who can not afford to pay.
| Contents |
Benefits of Long-Term Care Insurance
Medicaid generally does not cover long term care provided in a home setting; in most cases, Medicaid does not pay for assisted living. However, Medicaid does provide services for people with low income or limited resources who "need nursing home care but can stay at home with special community care services." [1] People who need long term care traditionally prefer care in the home or in a private room in an assisted living facility.
If home care coverage is purchased, long term care insurance can pay for home care, often from the first day it is needed. It will pay for a live-in caregiver, companion, housekeeper, therapist or private-duty nurse up to 7 days a week, 24 hours a day. Assisted living is paid for by long term care insurance as is adult day care, respite care, hospice care and more.
Long-term care insurance can also help pay expenses for caring an individual who suffers from Alzheimer disease or other forms of dementia.
Other benefits of long-term care insurance:
- Many older individuals may feel uncomfortable relying on their children or family members for support, and find that long-term care insurance could help cover the expenses. Without long-term care insurance, the cost of providing these services may quickly deplete the savings of the individual and/or their family.
- Premiums paid on a long-term care insurance product may be eligible for an income tax deduction depending on the age of the covered person. Benefits paid from a long-term care contract are generally excluded from income.
Types of Long Term Care Policies
Two types of long term care policies are currently being sold: Tax Qualified and Non-Tax Qualified.
The Non-Tax Qualified was formerly called Traditional Long Term Care insurance. This type has been sold for over 30 years. It oftens includes a "trigger" called Medically Necessary. This means that the patient's own doctor can state that the patient needs care for any medical reason and the policy will pay.
The Tax Qualified long term care insurance policies do not have a Medically Necessary trigger. Their benefit "triggers" state that a person be expected to require care for at least 90 days, and be unable to perform 2 or more activities of daily living (eating, dressing, bathing, transferring, continence) without substantial assistance (hands on or standby) and that a doctor provides a Plan of Care; or that for at least 90 days, the person needs substantial assistance (hands on, standby or reminding) due to a severe cognitive impairment and a doctor provides a Plan of Care.
Fewer and fewer non-tax qualified policies are available for sale. Once a person purchases a policy, the language cannot be changed by the insurance company and the policy is, if an individual policy, guaranteed renewable for life. It can never be cancelled by the insurance company.
Group long term care policies may or may not be guaranteed renewable. Many group plans include language allowing the insurance company to replace the policy with a similar policy, but allowing the insurance company to change the premiums at that time. Some group plans can be cancelled by the insurance company. These are not recommended.
Bold text Complications You May Encounter with Eligibility and DeductibleBold text Policies deductible period or elimination days may differ from 30 to 90 calendar days. Many policies require intended claimants to provide proof of 30 to 100 service days of paid care before any benefits will be paid. Some require you to pay for long-term care up to one year before, you will be eligible to collect benefits.