Traditional Long Term Care Insurance Plans

An Evolving & Moving Target

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The Basics of Traditional Long Term Care Insurance Plans

What is Long Term Care?
Long Term Care is the assistance provided to a person who has a cognitive impairment requiring continual supervision or is unable to perform certain activities of daily living (ADLs) such as bathing, dressing, or getting up from a bed or chair. Long term care services may also include assistance with day to day activities such as medication management, personal hygiene, light housekeeping or meal preparation. Services provided by a physical, respiratory or speech therapist may also be included. Long term care can be provided in your home, an adult day care center, assisted living facility or a nursing home.

What Is Long Term Care Insurance?
It is insurance that provides for Home Care, Community Care and Facility Care.

What is Not Long Term Care Insurance?
Medicare or Group Insurance do not provide coverage for Long Term Care.

Long Term Care Coverage Is...
provided by Medicaid for Nursing Home Care, but only after you've exhausted all your assets.

Why People buy Long Term Care Insurance:

  • To provide dollars to help their families care for them
  • To protect assets
  • To protect retirement Plans
  • To provide peace of mind
  • To provide choice when care is needed
  • To provide independence

A good Plan should provide:

  • Home Care: Skilled Services, Homemaker Services, Chore Services, Hospice Care, Adult Day Care, Caregiver Training and Home Modification
  • Facility Care: Assisted Living Care, Alzheimer's Care and Nursing Care
  • Care Coordination: A trained professional to assess care needs, find providers, provide monitoring, design a plan of care and assist with initial claim forms.
  • Additional Features include Inflation protection, Alternate Care Benefit, Respite Care an Waiver of Premium.

Long Term Care Insurance Policy Structure

  • Daily or Monthly Benefit: Range from $50 to $500 Daily ($1,500 to $15,000 Monthly)
  • Benefit Period: Range from 1 year to 10 years, depending on issuing Company
  • Elimination Period: 30, 60, 90 days are common (deductible period before benefits are paid)
  • Maximum Initial Benefit: A function of the Daily or Monthly Benefit multiplied by the Benefit Period.

Claim Qualification

  • Require Assistance with at least 2 of 6 Activities of Daily Living (ADLs) - Bathing, Eating, Dressing, Toileting, Continence, Transferring
  • or require assistance due to severe cognitive impairment (e.g. Alzheimers)
  • and a Health Care Professional certifies the need for care expected to last 90 or more days and that benefits will be paid to you based on a plan of care

 

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Taxation & Long Term Care Insurance

TABLE 1
Entity Deductibility Income Reporting Discrimination Rules Tax Treatment
of Benefits
Individual Taxpayer who does not itemize deductions No LTCi premium
deduction available
N/A N/A Tax-Free
Individual who itemizes deductions The lesser of the Premium or the Eligible Premium from Table 2.  Medical Expenses are deductible to the extent they exceed 7.5% of Adjusted Gross Income. N/A N/A Tax-Free
Self-Employed Percentage from Table 2 of the lesser
of Premium or Eligible Premium is deductible as a business expense.  The remaining percentage is included as a Medical Expense under the 7.5% rule.
No None Tax-Free
S Corporations
Partnerships
LLC's
Same as self-employed The portion of the Premium paid by the entity on behalf of a partner is included in the partner's income. None Tax-Free
C Corporations The entire Premium is fully
deductible by the corporation.
No None Tax-Free

 

TABLE 2
Section 213(d)(10)
Tax Year 2013 2014 2015
Age at end of
Tax Year
Eligible Premium
Eligible Deduction: 100%
Eligible Premium
Eligible Deduction: 100%
Eligible Premium
Eligible Deduction: 100%
40 & Under $360 $370 $380
41 - 50 $680 $700 $710
51 - 60 $1,360 $1,400 $1,430
61 - 70 $3,640 $3,720 $3,800
71 & Over $4,550 $4.660 $4,750

 

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LTC Company & Benefit Comparisons

 

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Long Term Care Quote Engine

 

 

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