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Longevity
Insurance | Long Term Care Insurance |
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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." People who need long term care
traditionally prefer care in the home or in a private room in an assisted living
facility.
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Insurance
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's 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 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
Insurance Policies
Two types of long term care insurance
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 often includes a
"trigger" called a "Medical Necessity" trigger. This means that the patient's
own doctor, or that doctor in conjunction with someone from the insurance
company, 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 Medical
Necessity trigger. In addition, they require 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. One reason is
because consumers want to be eligible for the tax deductions available when
buying a tax-qualified policy. The tax issues can be more complex than the issue
of deductions alone, and it is advisable to seek good counsel on all the pros
and cons of a tax-qualified policy vs. a non-tax-qualified policy, since the
benefit triggers on a good non-tax-qualified policy are better (the
tax-qualified policies carrying restrictions - by law - on when the policy
holder can receive benefits).
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Once a person purchases a long term care insurance 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.
Complications encountered with eligibility and deductibles
Many long term care insurance policies have deductible periods or
elimination days that may differ from 20 to 120 actual calendar days. Many
policies require intended claimants to provide proof of 20 to 120 service days
of paid care before any benefits will be paid. In some cases the option may be
available to select 0 elimination days when covered services are provided in
accordance with a Plan of Care. Some may even require that the policy for long
term care be paid up to one year before you become eligible to collect benefits.
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