Questions to Ask Before Buying Long-Term Care Insurance Details That Affect You: Part 2 of 2

Questions to Ask Before Buying Long-Term Care Insurance Details That Affect You: Part 2 of 2

In our previous blog article, we began the discussion on long-term care insurance with some initial questions about how much insurance you need, for how long a period, and how insurance benefits may be defined. In this segment, we want to introduce you to some of the more technical aspects of these policies.

Is the policy tax qualified?
Under the provisions of the Health Insurance Portability and Accountability Act of 1996 (which went into effect on January 1, 1997), long-term care premiums may be deducted from your Federal income tax within certain limits and to the extent you have medical expenses (including these premiums) that exceed 7.5 percent of your adjusted gross income. Any benefits received under a tax-qualified policy are not taxable if the policy meets certain guidelines. Employers may treat long-term care insurance premiums paid on behalf of their employees just like health insurance and fully deduct the cost. Moreover, the employees do not have to include the premium as income and the benefits, when received, will be tax-free.

Are the benefit triggers clearly spelled out?
A benefit “trigger” is the inability of the policyholder to perform specified Activities of Daily Living (ADL’s), such as transferring, toileting, bathing, continence, dressing, and eating. Ask your insurance agent for a copy of the actual policy in order to see for yourself how the benefit “triggers” and ADL performance are described. The policy you want must include coverage for ADL Standby Assistance. Otherwise, you will own a policy that is harder to qualify for benefits at claim time. Don’t make the mistake of focusing your comparison of companies on less important details like a 21-day vs. 31-day bed reservation benefit. Moreover, check policy language to be sure pre-existing conditions are covered.

Does the policy cover homemaker services?
Homemaker services include cooking, shopping, changing beds, cleaning the house, and doing laundry. Not all policies provide coverage for homemaker services and some require that services be specifically included in a plan of care. Look for policies that clearly define these services and give you a choice of options.

How does my health history affect the cost of the insurance?
Your personal health history can make a difference in both coverage and premium costs. Since insurance companies differ in the way they view certain health problems, it’s essential that your insurance agent has access to a broad selection of insurance carriers.

Is your agent or broker Certified in Long-Term Care (CLTC)? And do they offer a choice of companies?
Many insurance agents are now selling long-term care insurance since it has received so much media attention. Because the purchase of this type of protection is so important, we recommend that you do business with an agent or broker who is knowledgeable, experienced, and has established a good reputation in this area of insurance. Also, you want an agent who represents a number of insurance carriers so you can choose from a variety of policies.

The questions raised in this 2-part blog article are presented as a guide for helping you evaluate long-term care policies and make the decision that is best for you. As always, we would welcome the opportunity to help you evaluate your long-term care insurance needs.