LTC HOME CONSIDERATIONS FUNDING THE COVERAGE WHAT IS LTC? WHO NEEDS LTC? MEDICADE/MEDICARE? UNDERSTANDING LTC AVAILABLE SERVICES TYPES OF FACILITIES UNDERSTANDING SOCIAL SECURITY COMPARE POLICIES WORK SHEET QUOTE QUESTIONNAIRE
Tax Qualified – Most policies issued are tax qualified. Be sure the one you purchase is tax qualified. There are two issues concerning taxes: premiums and benefit Payments. In a tax qualified policy you may be able to add the premium to your deductible medical expenses. You may be able to deduct the amount of premium that is more than 7.5% of your adjusted gross income. The maximum long-term care premium you can add to your other deductible medical expense is based on your age at the end of each tax year.
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Risk Classification – Applying for a long term care policy is similar to life insurance. Approval is subject to underwriting, an exam is required, medical records are often checked and depending on the outcome of the underwriting evaluation the person applying could receive a preferred, standard or a decline risk classification. Premiums for a standard policy are higher than a preferred policy.
Daily Benefit – When applying for long term care insurance one of the decisions to make is amount of the daily benefit. Average cost for a nursing care facility is $40,000 a year and that figure can easily double in some regions. $40,000 equates to $110 per day. Most of the policies sold today use the expense-incurred method. With the expense-incurred method daily benefits are paid to you or your provider up to the limits of your policy. The insurance company must decide if you are eligible for the benefits (see benefit eligibility) and if your claim is for eligible services. An eligible service may be a facility approved by the insurance company or it may be a nurse or equipment or home modification approved by the insurance company, or it may be a service that is included in your policy. In the indemnity method the insurance company only needs to decide if you are eligible for benefits (see benefit eligibility) then pays benefits to you up to the limits of the policy.
Benefit Period – The amount of time the policy will pay benefits. The longer the time the more costly the policy. This is another variable decided when applying.
Elimination Period – The elimination period is the amount of time before the insurance company will start paying benefits, the longer the wait the less expensive the policy. Another variable decided upon when applying for the policy. Some long term care policies require the elimination period be satisfied only once.