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A Few LTC Related Q&A's

6/18/2013

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Q. Is there tax benefits associated with Long Term Care insurance?

A. Yes.  Based on the Health Insurance Portability and Accountability Act (HIPAA) passed by Congress in 1996, long term care insurance policies that meet certain standards receive favorable tax benefits. 

The benefits are: the LTC payments you receive are tax free, you can also deduct long term care insurance premiums (subject to your age and income). 

Q. I already have Medicare, why should I get long term care insurance?

A. Medicare only covers skilled nursing care but doesn't pay for continuing care in nursing homes or assisted-living facilities. Nor does Medicare pay for home attendants, who provide personal care, such as dressing or bathing, which can easily cost $400 or more a day.

Q. What does Long Term Care policy pay for? 


A. Read your policy and make sure it covers care at a range of facilities, including nursing homes, assisted-living facilities, adult day-care and hospices. Newer policies reimburse for at-home care, even if not from a certified health-care professional, while old policies might require the home-care attendant to be a certified nurse.

Q. How much does Long Term Care policy pay? 


A.  It depends what policy you bought.  Many people overestimate what their policy will pay.  It might cover a percentage of certain costs or a percentage of "usual and customary" charges.

Q. Should you replace your coverage? 


A. If you decide your current insurance doesn't stack up, make sure you are able to get a new policy before dropping your old one.

Q. What if I don't need Long Term Care but I bought a policy?

A. First, call yourself lucky!  But if you want to feel better, there are two options available from insurance companies: 

Option 1. Return of premium LTC policy.  It returns all the premiums you paid if you pass away and never use the policy.

Option 2. A combination of Life and LTC insurance policy.  It pays either a LTC benefit, a death benefit, or both if you only use a portion of the LTC benefit.

Remember, there is no free lunch.  Insurance companies already calculated the risk they are taking when they introduce the various policies.  

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