7 Things to Know Before Buying Long Term Care Insurance
Buying a long term care insurance policy is a long term commitment – you may not need the benefits in the near future but you have to keep paying the premiums to keep the policy active till you do need the benefits. So before you buy a long term care policy you should learn everything in detail about this type of a policy.
Anyone may need long term care at any time throughout their life but the elderly need it more because with old age comes many chronic health issues which makes the patient incapable of leading a normal life.
1. What Does a Long Term Care Insurance Policy Cover
This policy covers the expenses incurred for receiving any kind of long term care services – it could be in the form of charges for a hired health aide, for stay in a nursing facility or assisted living facility or hiring help at home for physical assistance etc.
2. How Does Having Long Term Care Insurance Help
A regular health insurance policy will not pay for hospital stay for an extended period or cover the costs of assisted living facility. Medicare has very limited coverage for long term care services. These services are very expensive and your savings may fall short of covering the costs. Also with insurance your choices and affordability becomes wider.
3. How Are the Long Term Care Benefits Paid
After you buy a long term care policy you have to keep paying the premiums every month. When you need long term care services you can file a claim. For receiving the benefits the policyholder should be unable to perform at least two of the listed activities of daily living like bathing, eating, dressing etc. This has to be certified by a doctor and the company may also carry out their evaluation. Apart from being eligible, the policyholder also has to complete his elimination/waiting period in order to start getting the benefits.
The benefits are paid out as per the specified per day limit and the total maximum lifetime amount of the policy. Some “shared policies” lets a couple share a fixed benefit amount.
4. Where to Buy Long Term Care Insurance Policy
These policies have to be bought from private insurance companies on your own. Employers may also offer these policies to their employees at group rates. These policies involve medical underwriting. So good health condition is an advantage for interested customers. Those who are already suffering from severe issues or receiving long term care services will not be approved. Underwriting rules are less strict for group applications. Some of the major carriers of this policy are –
- Bankers Life and Casualty
- Genworth Financial
- Mass Mutual
- Mutual of Omaha
- New York Life
- NorthWestern Mutual
5. What Are the Factors Which Determine the Premiums
Every insurance company has different rates for long term care insurance policies. The rates depend on a number of factors.
- Age and health condition – The better your health the lower will be your premium.
- Gender – Policies for women have higher premiums than men
- Marital status – Married couples get lower premiums than singles
- Extent of coverage – Policy factors like elimination period, daily benefit amount, lifetime maximum amount, riders and add-ons etc determine the premiums
6. What are the Tax Advantages of Buying a Long Term Care Insurance Policy
Long term care insurance premiums are considered as medical expenses and are exempt from federal and many state taxes. However the policy has to be a ‘tax-qualified policy’ in order to be claimed for tax deductions. Based on a person’s age there are fixed limits up to which tax deductions can be claimed for these premiums.
7. How to Take Advantage of State Partnership Plans
If your state offers ‘partnership plans’ –Medicare and long term care insurance- you can protect a larger portion of your assets and yet be eligible to receive long term care benefits from Medicaid.
Long term care insurance has many advantages but since the premiums are high you should carefully consider your circumstances before buying a policy. You should also compare a few policies from different companies and seek the guidance of an insurance consultant.