Choosing a Long-Term Care (LTC) Policy: The Basics

The goal of a LTC policy is to help pay for your care when you're too old or too sick to take care of yourself.
Choosing and purchasing a LTC policy must be done while you're still healthy.
It's usually too late after you become disabled either by age or an illness.
Choosing the LTC insurance right for you is critical to protecting your estate and reducing the burden placed on your family.
Common Factors:

• "Qualified" Long Term Care Policy: Premiums for qualified Long Term Care policies are considered medical care and therefore qualify as medical deductions.
  The federal government determines if the LTC meets certain criteria and if it qualifies.
  Federal law limits how many qualified LTC premiums may be deducted each year.
  
• Benefit amount: Policies typically specify the maximum benefit paid.
  Surveying of local nursing homes can help determine how much you'll need.
  
• How benefits are paid: LTC benefits are typically paid under one of the following methods:
• Reimbursement: Pays the lesser of the actual expenses incurred or the limit specified in the policy.
  
• Indemnity: Pays the entire daily benefits as long as the insured requires and receives Long Term Care services, regardless of the amount spent.
  
• Disability: Pays the full daily benefit-once the eligibility criteria are met-even if LTC services are no longer being provided.
  
• Inflation protection: Health care costs inevitably go up and Long Term Care policies should have provisions for inflation.
  An additional charge may be required for this protection.
  
• Guaranteed renewability: Almost all LTC policies are guaranteed renewable.
  Policies can't be canceled as long as the premiums are paid on time and as long as the status of your health is reported accurately on the application.
  Guaranteed renewable doesn't mean premiums stay the same.
  Insurers reserve the right to raise premiums.
  Some older policies are not guaranteed renewable.
  
• Waiver premium: Some polices waive future premiums after you have been in a nursing for a specified number of days.
  
• Prior hospitalization: Before benefits will be paid under the policy, this provision requires hospitalization prior to entering a nursing home.
  This feature is no longer allowed in all states, but older policies may still include this provision.
  Today, policies no longer include hospitalization clauses.
  
• Place of care: Some policies may require that the nursing home be licensed or certified by the state or that they meet certain record-keeping requirements.
  
• Plan of care: The insured's physician and a multi-disciplinary team of practical nurses, social workers, and other health care professionals, determine a plan of care that outlines the appropriate level of care necessary to help the insured perform necessary daily activities.
  

Three Levels of care:

1. Skilled: Supervised skilled medical care provides daily nursing and rehabilitation care.
   
2. Intermediate: Identical to skilled care, but it's only required occasionally.
   
3. Custodial: Helps the insured perform daily activities including eating, getting bathed, dressing, and using the toilet.
   This type of care does not necessarily require the help to be medically skilled, but the care has been deemed necessary by a physician.
   

Pre-existing condition: Some policies may limit coverage of pre-existing conditions so that people who are already ill can't purchase a policy.
However many policies will offer benefits if the pre-existing condition was overcome six months prior to applying for the policy.
And if the pre-existing condition re-occurs with six months after the effective coverage date, some policies will not pay benefits.

• Waiting, elimination, or deductible period: Most LTC policies require you to pay on your own for a specified number days before the insurance company begins to pay.
  The shorter the waiting period the higher the cost of the LTC.
  
• Alzheimer's disease: Most policies now include coverage for organic brain disorders including Alzheimer's disease.
  
• Home health care: Many LTC polices offer coverage for care provided in the insured's home.
  It is most often offered as a rider, requiring an additional premium, to nursing facility coverage, and reimburses long-term care costs received at home.
  
• Rating the company:Long Term Care companies need to financially sound are known to treat policyholders fairly.
  

Seek Professional Guidance Perfect LTC policies do not exist.
Get professional guidance on this important decision.
Compare and weight the policy's features.
Generally, the more benefits, the higher the premium.
This article is intended to serve as a basis for further discussion with other professional advisors both legal, financial and tax.
We have made every effort to provide accurate numbers and explanations.
The information in this report should only be used as basic information regarding the subject of probate.
Always consult with your tax preparer and legal advisor regarding questions for your specific situation.
This report does not purport to provide legal advice at any level and is only meant as general information.