Long Term Care Insurance

Long Term Care Insurance

The percentage of people living long lives is rising in industrialized countries like Canada, the United Kingdom and the United States. But as the population ages, there is an increased need for long-term insurance to take care of their daily needs. Standard health insurance and programs like Medicaid and Medicare pay some of the costs associated with treating the medical problems of the growing population of elderly worldwide, but many of these elderly people who aren’t ill need help with everyday activities like bathing, dressing, eating, continence, toileting and walking. To pay for those services, many elderly people buy long-term care insurance.

Who Needs Long-Term Care

Almost three out of four people over age 65 will need some form of long-term care services. People between the ages of 18 and 64 make up about 40% of the population already receiving long-term care. Severe cognitive impairment makes them require supervision to handle their basic daily activities. Women are impacted more than men because they usually outlive men. They also act as caregivers for other people in their lives. As their ability to do for themselves declines, the elderly often feel uncomfortable having to depend on family members to help them with daily activities. This is where long-term care insurance can help.

The Benefits

Long-term care insurance offers a wide range of benefits. Some policies pay for visiting caregivers, nurses, housekeepers and companion. Others cover the cost of having a caregiver or companion live with the elderly. There are also policies that cover assisted living, home care, adult daycare and nursing home or hospice care. Some long-term care policies even cover modifications to the policyholder’s home to accommodate disabilities. Medicaid doesn’t cover long-term in-home care, so having a long-term care policy helps prevent the elderly or their loved ones from having to drain their personal funds to pay for the services they need. This helps to protect their assets.

Types Of Policies

There are two popular type of policies covering long term care in the U.S. The most common is where continual premiums are paid. If the funds aren’t used, the company keeps the money. A second type of policy comes with a ‘return of premium’ stipulation. If the money paid in to the policy isn’t used before the insured dies, the unused funds are paid as a death benefit to the beneficiary. There are also a wide variety of other combination or hybrid policies that can be used to cover the cost of caring for people’s long-term needs.

Tax Breaks

The premiums people pay towards their long term care policies may be tax deductible. The size of the deduction is dependent on the covered person’s age. Generally speaking, benefits people receive through long-term care contracts doesn’t count as income. In some states they qualify for tax deductions or tax credits. Businesses can also deduct 100% of the premiums they pay toward the long-term care of their employees if it isn’t included in the taxable income of the employee. In the U.S. long-term care policies are classified as being either tax qualified or non-tax qualified based on the benefits and restrictions involved.

Benefit Eligibility And Deductibles

Most long-term care policies begin paying benefits to the policyholder when they need help with at least two daily activities or display significant cognitive impairment. Most of the policies have a 30 to 120 day waiting period after an illness, fall or other incident triggers a policyholder’s need for long-term care. Some policies require the policyholder to provide proof they have paid for care for between 30 and 120 days before they begin making payments. However, there are policies that let policyholders choose zero elimination days before covered services are provided.

LTC In Canada And Germany

In Canada long-term care policies usually give policyholders the option to add Return of Premium on Death and Protection from Inflation riders. German laws requires everyone to have healthcare coverage. In Germany, people can choose between mandatory healthcare insurance and voluntary, private care. The costs are split evenly between employees and employers. There are three types of private care policies. The most expensive one pays policyholders a set monthly pension. The second option pays for mandatory health care a provides a small pension. The third and most commonly chosen option pays a specific amount of money for daily care to the policyholder.

Best Time To Buy A Policy

Experts recommend getting long-term health insurance between the ages of 45 and 55, while you’re in good health and can qualify for discounts and better rates. Some policies allow people to increase their coverage later. When people apply for coverage in their 60s and more applicants are turned down for health reasons. By age 69, only about 38% of applicants qualify for long-term care policies and those that qualify pay high premiums.