Long-term care is when a person needs help with daily living activities; this can be as a result of illness or accident. To have the funds to be looked after at home is often why a long-term care insurance policy is taken out. Not everyone has family to assist or maybe not wanting to be a burden on family is the motivating factor. Life savings can become quickly depleted when required for long term care use.
Isn’t Medicaid the same? No, whilst this provides benefits deemed medically necessary they do not cover long term care in the home or in assisted living. As long term care can become a factor at any stage of life it has been found more people want to remain in their own homes.
Long-term care insurance can be tax qualified or non tax qualified.
- Tax qualified – These are the more popular type of policy taken and they require that the person expects to need care for at least 90 days and they are unable to do at least two daily living activities. A Doctors plan of care is essential to qualify for this insurance and the benefits are non taxable. By law the is a dictate on when benefits can be received.
- Non tax qualified – Does not have the 90 day or the minimum daily living restriction. There are no caps or limitation on benefits
As with any insurance policy you need to shop around, there are less non tax qualified policies around but they are certainly worth considering. A number of factors influence the rates of the insurance:-
- The person’s age.
- The daily or monthly benefit.
- How long the benefits will be paid.
- The elimination period.
- Inflation protection.
- Health rating
Companies offer a range of additional cover with their polices, for spouses/partners and families, along with a variety of payment methods. It is suggested that no more than 7% of your income should be spent on this type of insurance, if you are going to receive Medicaid or have limited assets, or receive social security payments then it is not advised to purchase this form of insurance. The younger you take out this insurance the lower the premiums but it still a financial commitment that you need to take advice on and look around at what the various companies offer before making your choice.
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