Evaluating Long Term Care Insurance Options

A long term care insurance or LTCi policy is for people who plan to meticulously save for their future requirements well in advance. Considering all the expenses that come with retirement, such as skyrocketing health care costs, it’s crucial to be able to save enough to cover the cost of a comfortable lifestyle when various sources of income come to an end.

As you start planning your retirement, it becomes imperative to evaluate various saving options in order to avoid being a burden on the family, in terms of at least the financial aspects. Besides protecting family finances and keeping liquidity in hand, LTC insurance has evolved for the better and today offers a lot more than just a nursing home plan.

Before opting for a policy, it’s important to understand how long term care insurance has evolved over time.

Older Features of Long Term Care Insurance

Here’s an overview of how LTCi policies used to work in the past:

• Qualifying for Benefits
  Older LTC insurance plans mirrored the qualification requirements of Medicare long term care insurance plans. Anyone applying for LTC policies needed a minimum of three days/nights’ hospital stay in order to be considered eligible for a coverage. A typical LTC plan covered only custodial care rather than skilled necessary care.
• Taxes
  At least till the mid-1990s, benefits under LTC insurance plans were not certain to be tax-free. Hence, individuals who received their insurance benefits during that time frame were most likely to be taxed on the benefits they received, by the federal or state government.
• Coverage Options
  Earlier, long term care policies only provided coverage for nursing home stays. At certain stages for individuals the plan was extended to in-home care or assisted living options, but these benefits were mere add-ones to the initial nursing home-only plan and were not for sale as original insurance coverage plans.
• Benefit Payment Options
  In the past, a long term care insurance plan was not exactly long-term, for it offered a daily option to reap benefits at the end of the day, once the chosen policy amount was adjusted as per inflation. This caused immense confusion and concern since the actual costs of nursing and custodial expenses were not being met.

Present-Day Features of Long Term Care Insurance

Here’s how LTCi policies work today:

• Qualifying for Benefits
  The LTCi plans of today offer numerous and rather flexible cost-saving options for individuals who qualify, each somewhat different from the other. Qualifying factors are based on the ability/inability of the applicant to perform general activities of daily living (ADLs) and require a doctor’s certification.
• Taxes
  All modern long term care insurance policies that possess a tax-qualified certification should ideally have a 90-day wait for the benefits to start rolling in. When investing in an LTCi plan, individuals should understand that any policies that have less than a 90-day wait are not going to be tax-qualified.
• Coverage Options
  Today’s LTCi plans can be a combination of one or more types of care and coverage, ranging from in-home care/home modification to assisted-living/continuing-care facilities. Like life insurance, modern LTC plans vary in benefit payment options and often incorporate spousal discounts, multi-generational discounts and tailored plans.

When opting for a long term care insurance plan, the ideal way to approach it is to consider the rate of increase it has seen over time and the safety rating that the insurance provider holds. As always, working with a professional insurance advisor is the best way to understand the best option as per your unique circumstances and financial abilities.