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Encyclopedia > Long term care insurance

Long-term care insurance, an insurance product sold in the United States, helps provide for the cost of long-term care beyond a predetermined period. Long-term care insurance covers care generally not covered by health insurance, Medicare, or Medicaid. Image File history File links Gnome-globe. ... Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. ... Long-term care (LTC) is a variety of services which help meet both the medical and non-medical need of people with a chronic illness or disability who cannot care for themselves for long periods of time. ... Health insurance is a form of group insurance, where individuals pay premiums or taxes in order to help protect themselves from high or unexpected healthcare expenses. ... President Johnson signing the Medicare amendment. ... Medicaid is the US health insurance program for individuals and families with low incomes and resources. ...

Individuals who require long-term care are generally not sick in the traditional sense, but instead, are unable to perform the basic activities of daily living such as dressing, bathing, eating, toileting, getting in and out of a bed or chair, and walking. Activities of daily living (ADLs), is a way to describe the functional status of a person. ...

Long-term care isn't necessarily long term. A person may need care for only a few months to recover from surgery or illness.

As an individual ages, there is an increased risk of needing long-term care. In the United States, Medicare will not cover the expenses of long-term care, but Medicaid will for those who can not afford to pay.

Age is not a determining factor in needing long-term care. About 40% of those receiving long-term care are between 18 and 64. The late actor Christopher Reeve who in 1995 at age 42 became paralyzed following an equestrian accident and required 9 years of long-term care. Once a health condition occurs long-term care insurance may not be available. Early onset (before age 65) Alzheimer's and Parkinson's disease are rare but do occur. Michael J. Fox was 30 when diagnosed with Parkinson's. Christopher DOlier Reeve[1] (September 25, 1952 – October 10, 2004) was an American actor, director, producer and writer. ... Alzheimers disease (AD), also known simply as Alzheimers, is a neurodegenerative disease that, in its most common form, is found in people over age 65. ... For other persons named Michael Fox, see Michael Fox (disambiguation). ...



In the United States, 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 medically necessary 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. It has been suggested that this article or section be merged with Retirement home. ... Medical necessity is generally considered that which is reasonable, necessary, and/or appropriate based on evidence-based clinical standards of care. ...

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 daycare, respite care, hospice care and more. Caregiver may refer to: A voluntary caregiver An assisted living situation A nursing home A hospice care situation Category: ... Look up companion in Wiktionary, the free dictionary. ... A housekeeper is a person responsible for the cleaning and maintenance of (usually residential premises. ... Therapy (in Greek: θεραπεία) or treatment is the attempted remediation of a health problem, usually following a diagnosis. ... Private duty nursing is the planning of care and care of clients by nurses, whether an RN (Registered Nurse) or LPN/LVN (Licensed Practical Nurse). ... An adult daycare center is a non-residential health care facility specializing in providing activities for elderly and/or handicapped individuals. ... Respite care is the temporary residential care for a patient with the intention of providing a break for the primary care givers. ... Palliative care is any form of medical care or treatment that concentrates on reducing the severity of the symptoms of a disease or slows its progress rather than providing a cure. ...

Long-term care insurance can also help pay expenses for caring for an individual who suffers from Alzheimer's disease or other forms of dementia. For other uses, see Dementia (disambiguation). ...

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 out-of-pocket 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. The amount of the deduction depends on the age of the covered person.[2] Benefits paid from a long-term care contract are generally excluded from income.
  • Business deductions of premiums are determined by the type of business. Generally corporations paying premiums for an employee are 100% deductible if not included in employee's taxable income.[3]

Out-of-pocket expenses are direct outlays of cash which are not reimbursed. ... A tax deduction or a tax-deductible expense represents an expense incurred by a taxpayer that is subtracted from gross income and results in a lower overall taxable income. ... Look up Deductible in Wiktionary, the free dictionary. ... Taxable income is the portion of income that is the subject of taxation according to the laws that determine what is income and the taxation rate for that income. ...

Types of policies

In the United States, two types of long term care policies are currently being sold: Tax Qualified and Non-Tax Qualified.

  • The Non-Tax Qualified (NTQ) 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 Treasury Department has not clarified the status of benefits received under a non-qualified long-term care insurance plan. Therefore, the taxability of these benefits is open to further interpretation. This means that it is possible that individuals who receive benefits under a non-qualified long-term care insurance policy risk facing a large tax bill for these benefits.
  • The Tax Qualified (TQ) 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 due to a severe cognitive impairment and a doctor provides a Plan of Care. Benefits are non-taxable.

Fewer and fewer non-tax qualified policies are available for sale.[citation needed] 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.[citation needed] By law, tax-qualified policies carry restrictions on when the policy holder can receive benefits. Medical necessity is generally considered that which is reasonable, necessary, and/or appropriate based on evidence-based clinical standards of care. ... Activities of daily living (ADLs), is a way to describe the functional status of a person. ... Continence is the opposite of incontinence, and can mean: sexual continence urinary continence This is a disambiguation page — a navigational aid which lists pages that might otherwise share the same title. ...

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 canceled by the insurance company for health reasons but can be canceled for non-payment.

Most benefits are paid on a reimbursement basis and a few companies offer per-diem benefits at a higher rate. Most policies cover care only in the Continental United States. Policies that cover care in select foreign countries do so at a rated benefit.

Group long term care policies may or may not be guaranteed renewable or Tax Qualified (TQ). 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 canceled by the insurance company. These types are not recommended. To compensate for the higher insurance risk group plans may have higher deductibles and lower benefits than individual plans.[4] The Consolidated Omnibus Budget Reconciliation Act (COBRA) provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. [5]

Retirement systems such as CalPERS may offer long-term care insurance similar to a group plan. These organizations are not regulated by the state insurance departments. They can increase rates and make changes to policies without state scrutiny and approval. The California Public Employees Retirement System (CalPERS) provides pension fund, healthcare and other retirement services for 1. ...

Long-term care insurance rates are determined by four factors: the persons age, the daily (or monthly) benefit, how long the benefits are for, and the health rating (preferred, standard, sub-standard). Most companies will give spousal and multi-life discounts on individual policies.

Most companies offer multiple premium modes: annual, semi-annual, quarterly, and monthly with automatic money transfer. Companies add a percentage for more frequent payment than annual. Options such as non-forfeiture, restoration of benefits and return of premium are expensive and not recommended.

In California and select other states a program called the Partnership for Long Term Care contains among other benefits a "lifetime asset protection" feature in long-term care insurance policies.[6] The Deficit Reduction Act of 2005 makes the Partnership program available to all states who want to participate.[7] The Deficit Reduction Act of 2005, Pub. ...

Eligibility and deductibles

Many policies have a waiting period (deductible period), 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 zero elimination days when covered services are provided in the home 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 becoming eligible to collect benefits. The reason to choose a higher deductible period is for a lower cost premium. The waiting period (Hebrew: תקופת ההמתנה Tkufat HaHamtana) was the period which began in the Israeli Independence day of the Hebrew year of 5727, which was in May 15, 1967, with the crossing of the Suez canal and entering to the spaces of the Sinai peninsula by Egyptian ground forces, after the... The plaintiff, claimant, or complainant is the party initiating a lawsuit, (also known as an action). ...


  1. ^ http://www.cms.hhs.gov/MedicaidEligibility/02_AreYouEligible_.asp
  2. ^ IRC Sec. 213(d)(10)(A)
  3. ^ IRC Sec. 162(I0(1)(B)
  4. ^ Cost of Care
  5. ^ FAQs About COBRA Continuation Health Coverage from DOL
  6. ^ The California Partnership for Long Term Care
  7. ^ Deficit Reduction Act from CMS

External links

  Results from FactBites:
Avoiding Fraud When Buying Long-Term Care Insurance: A Guide For Consumers And Their Families (19262 words)
Insurance agents are loath to disclose policy pitfalls when it means risking the loss of a commission equal to life insurance commissions of 30% to 65% of the first year's premium, far more than the typical 10% commission many auto insurance agents earn.
Insurance companies should be held strictly liable for the acts of their agents to make sure policies are not exaggerated and sales presentations are honest and straightforward.
Of insurance company files that were investigated and excluding those who had died, 60% or more of the original policyholders allowed their policies to lapse within 10 years and one insurance company reported a lapse rate approaching 90%.
  More results at FactBites »



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