How To Buy Long Term Care Insurance
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Residents of some states may be able to find long-term care coverage through a State Partnership Program that links special Partnership-qualified (PQ) long-term policies provided by private insurance companies with Medicaid. These PQ policies:
Since Partnership-qualified policies must include inflation protection, the amount of the benefits you receive can be higher than the amount of insurance protection you purchased. For example, if you have a Partnership-qualified long-term care insurance policy and receive $100,000 in benefits from it, you can apply for Medicaid and, if eligible, retain $100,000 worth of assets over and above the state's Medicaid asset threshold. In most states the asset limit is $2,000 for a single person. Asset limits for married couples are often higher.
About 70 percent of Americans who reach age 65 will need some long-term care during their remaining years, according to a study from the Urban Institute and the U.S. Department of Health and Human Services. Although some people will get by with unpaid care from family members and others, nearly half will need some paid assistance. About 24 percent will need more than two years of paid care, and 15 percent will spend two-plus years in a nursing home.
Traditional Medicare, the public health insurance program for people over 65, does not cover long-term care beyond some skilled care right after hospitalization for an injury or illness. Some Medicare Advantage plans, from private insurers, offer supplemental coverage for services like meal delivery and rides to medical appointments, but it is limited.
Traditional long-term care policies work much like policies for auto or home insurance: You pay premiums, usually for as long as the policy is in effect, and make claims if you ever need the covered services.
Early LTC policies, sold in the 1990s and early 2000s, often offered generous benefits, such as lifetime coverage and benefits that grew at compounded rates of 5 percent per year. But insurers underestimated how much they would pay in claims and overestimated how much they would earn in investments. The result: They got into financial trouble and, with the permission of state regulators, substantially raised premiums on existing customers. Many companies stopped selling traditional long-term care insurance. Just a few companies sell the policies today, generally with more modest benefits at higher prices.
The majority of long-term care policies sold today combine coverage for long-term care with another benefit, usually life insurance or, less often, an annuity. These are known as hybrid or linked-benefit policies.
The California legislature requires the Insurance Commissioner to annually prepare a Consumer Rate Guide for long-term care insurance. This website consists of an overview of long-term care insurance, the types of benefits and policies you can buy, both as an individual and as a member of a group, information on what to consider before purchasing a policy and the premium rate history of each company that sells long-term care insurance in California.
This website will help answer some of your questions about long-term care insurance. It explains why people may need long-term care and how this type of insurance can help cover the cost for care. Long-Term Care policies most often pay for benefits on a reimbursement basis which means that the payment will be made to you after you have received the covered care and/or incurred the costs and submitted a claim. However, there are some policies (typically more costly) that will pay a cash benefit. It is important to understand the coverage provided and how benefits will be paid/reimbursed before you purchase a long-term care insurance policy. When you receive your policy, be sure to read it and ask questions if there is anything in the policy that you don't understand. The Rate Guide explains how long-term care insurance is structured and what benefits you can buy. A qualified long-term care insurance agent or the Health Insurance Counseling and Advocacy Program (HICAP) can help you with these questions and many others.
Your personal risk of needing long-term care depends on many factors. Some of those are how long you may live, your health history and whether you have a spouse or family members who can provide some of the care you may need. If you feel you have a greater risk, you may want to consider applying for coverage while you are still able to qualify.
Depending upon the type of policy, long-term care insurance can cover any of the following: Care in a Facility that is not an acute-care hospital. Some of the terms used to describe \"facilities\" that can provide long-term care services include nursing homes, Residential Care Facilities and Residential Care Facilities for the Elderly (sometimes called Assisted Living Facilities), skilled nursing facilities or Intermediate Care Facilities. Home Care including Home Health Care, Personal Care, Homemaker Services, Adult Day Care, Hospice Services or Respite Care. (Some Hospice and Respite care can also be received in a facility like a nursing home).
The California Partnership for Long-Term Care (the Partnership), a program of the California Department of Health Care Services (DHCS), is an innovative partnership among consumers, the State of California and a select number of insurance companies, plus the California Public Employees Retirement System (CALPERS). These insurers offer a special type of long-term care insurance policy, commonly called \"Partnership\" policies, that must meet certain requirements set by the DHCS. Insurance companies participating in the Partnership program must have their Partnership policies approved by both the Department of Insurance and the DHCS. Additionally, only insurance agents who have received special training are able to sell you a Partnership policy and to advise you as to whether the Partnership program works for you. Be sure to confirm that your agent has this special certification to sell Partnership policies.
Each Partnership-approved policy includes insurance benefits to cover the care you may need and automatic inflation protection to ensure that the benefits keep pace with the rising cost of care. Partnership policies also have other important features that are not required in other long-term care insurance policies. To learn more about these policies and the companies that are approved to sell them, call the Partnership for free brochures at 800-CARE445 (800-227-3445).
Congress passed legislation effective in 1997 that established the tax treatment of premiums paid for and the benefits paid/reimbursed by long-term care insurance policies that met certain federal standards. This legislation is called the Health Insurance Portability and Accountability Act or HIPAA. Long-term care policies that use the federal standards to cover benefits are labeled as \"Federally Tax Qualified\". Some or all of the premiums for these federally tax qualified policies may be deductible as a medical expense on your federal and California income tax returns (depending on your age and the amount of annual premium).
Policies sold as federally tax qualified long-term care insurance use a standard of eligibility for benefits that may be stricter than the standards established in California for non-qualified policies. It may be easier to qualify for benefits from non-tax qualified policies that use the standards established by California.
If you have questions about the tax status of a policy you own or one you are considering buying, your long-term care insurance agent can advise you. If you have specific questions pertaining to how the purchase of tax qualified long-term care insurance will impact the deductions you take or the taxes you pay, you should talk to your tax advisor to see how it will affect your individual taxes.
An individual long-term care insurance policy is a contract between you and the insurer. These policies must be approved by the California Department of Insurance (CDI) and have all of the consumer protections required under California law. Individual policies are \"guaranteed renewable\" and cannot be canceled by the insurance company unless the premium is not paid on time. However, every company has the right to increase the premiums it charges with proper notification and approval from the Department of Insurance.
Group long-term care insurance is a contract between an insurer and a group such as an employer on behalf of its employees or a trade or professional association on behalf of its members. If you are covered under a group plan, you receive a \"certificate\" rather than a \"policy\" of insurance. Also, many of the policy terms have already been negotiated by the group, and the group (called the \"master policyholder\") has the option to terminate the policy at any time. Often, but not always, group insurance is less expensive than individual insurance. If group coverage is terminated, you have the right to continue the coverage or buy a conversion policy depending on the provisions of the policy and other factors. If you purchase group coverage, ask about what options will be available to you if the group cancels the policy or if you lose your membership or eligibility.
Insurance policies describe what they will cover, what kind of care they will cover, who can provide the care and conditions that need to be met before a company will pay/reimburse the cost of benefits. Described below are the services required in a long-term care insurance policy approved under current California law. Be aware however, that California law has changed many times over the years and that insurance policies sold in previous years may have different requirements than are shown here.
In California, most skilled, intermediate and custodial care is received in nursing homes that are licensed as \"skilled nursing facilities\". All long-term care policies except Home Care Only cover this kind of care. 781b155fdc