Long Term Care Insurance FAQ

By Compuquotes Team on April 23rd, 2008

It is hard to face the reality of getting older and seriously consider how to pay for medical expenses. Those who rely on social security or Medicare or Medicaid to pay for their retirement quickly realize that they are not enough to pay for more intensive care. Long-term care insurance is designed to give those worried about finances in their golden years piece of mind.

What is long term care insurance?

Long-term health insurance is designed to work with Medicare and other programs to pay for care expenses. This care can include but is not limited to in-home care by a private nurse, community care in an assisted-living home, and nursing home care.

Who is eligible for long term care insurance?

Eligibility requirement vary depending on the insurance company. Most are unwilling to accept those who already have serious medical problems or already receive care. The younger the applicant, the more likely they will receive coverage.

How much coverage should I buy?

Coverage options depend on the plan that is being offer to you. Usually the applicant has the option to buy home care coverage. This is required to receive benefits for care provided by a caretaker at a private residence.

Other factors depend on your age at the time of purchase. Those 55 or younger should choose a plan with inflation protection. This coverage costs more, but it also increases claim payments with the cost of health care.

What are the rates?

The rates of the plan are based on a number of factors including the deductible, terms, coverage, and the age of the applicant. The best way to secure a lower rate is to buy the plan early. Those who purchase a plan at 55 will pay less for a longer term than those who purchase at 65.

What is the difference between a tax qualified and non-tax qualified plan?

A non-tax qualified plan is the most common form of coverage. These plans use a benefit trigger that is defined in the policy to determine when claims can be made on the policy. This trigger is often at the discretion of your doctor. Benefits paid out to the insured from this kind of plan are taxable. This means that they may have to pay some the benefit back in taxes.

Tax qualified policies use a static trigger. If the insured needs 90 days of care and cannot perform 2 common daily tasks, the policy goes into effect. Since a doctor does not determine the trigger, these benefits are not taxable.

What is a �benefit trigger�?

A benefit trigger is a qualifying event that allows you to start making claims on the policy. Sometimes, this trigger is defined in the insurance contract. Your doctor and representatives from the insurance company may have to verify that the trigger has been met in order to start payments.

What is a deductible period?

A deductible is the amount that the insured is responsible for before the insurance steps in to pay expenses. Instead of a deductible amount, most long term health care plans have a period. You must pay for the cost of care for an agreed upon period of time before the company pays benefits. This can range from 20 to 120 days.

More information on Long Term Care Insurance

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