Long-Term Care Insurance
A tax-qualified Long-Term Care Insurance policy may provide tax advantages to
individuals and business owners. A policy is considered tax-qualified if it meets several
The policy must provide benefits only when the policyholder qualifies for help with two or more
Activities of Daily Living (ADLs) such as eating, transferring, toileting,
dressing, bathing, incontinence or needs supervision as a result of a
cognitive impairment, such as Alzheimer’s disease.
A tax-qualified policy may offer inflation protection and non-forfeiture benefits. The inflation
protection option (now available in many formats) ensures that the policy’s benefits increase over
The non-forfeiture benefit preserves some coverage for purchasers who stop paying premiums.
Compared to other forms of insurance or retirement savings plans, long-term care insurance is
unique in being tax-advantaged when purchased and when benefits are paid out.
State Tax Codes Increasing Offer Incentives
A number of States offer tax incentives for the purchase of Long-Term Care
Insurance. A knowledgeable long-term care insurance professional can provide more
Will Medicare Cover Long-Term Care Costs?
Medicare is generally available for people age 65 or older, younger people
with disabilities and people with End Stage Renal Disease (permanent kidney failure requiring
dialysis or transplant.)
Medicare pays limited amounts for skilled care following a hospital stay. Medicare does not cover
most long-term care services that assist people with the activities of daily living over a long
period of time.
Medicare will only cover the first 100 days of care in a nursing home per Benefit Period if you are
receiving skilled care, and have a qualifying hospital stay of at least three days and enter the
nursing home within 30 days of that hospital discharge.
There are deductibles and co-pays (that increase annually). In addition, Medicare covers limited
home visits for skilled care and incidental homemaker services.
Do Individual or Group Health Plans Cover Long-Term Care Costs?
Health plans may cover some of the skilled medical services needed when one
can’t care for oneself after an illness or injury, but usually for a limited period and only as
long as there is evidence of improvement.
Health plans typically do not cover ongoing chronic care such as an extended stay in an assisted
living community or nursing home, or a continuing need for a home health aide to help you in
and out of bed.
What About Disability Income Insurance?
Disability income insurance is designed to replace income lost because of an
inability to work due to accident or injury. It provides no additional benefits to specifically pay
for long-term care expenses. And, it generally ends when you stop working or reach age 65 – just
when you are most likely to become disabled and need long-term
Download a copy of the Tax Deductibility
A Final Word – For You
It pays to partner. Our knowledge and experience with leading long-term care
insurers helps you provide your clients with the best options and least risk of a declined
And A Final Word – For Your Clients
Unfortunately, there’s no way to know for sure whether your clients will find
themselves in a long-term care community or needing specialized care in their own home.
What you can tell your clients is that if they do end up needing long-term health care
and they don’t have a strategy in place to cover costs, the cost of long-term care may wind up
costing them everything they own.