Long Term Care insurance is rising in popularity. Following is a definition of this insurance, including the general types available. Services provided are discussed. The advantages to having this coverage, and the best time to purchase a policy, will also be explained.
This coverage helps cover the expense of care for an extended period. The beneficiary can be virtually any age, and does not have to be "sick" in the clinical sense. This is simply someone who cannot carry out at least two necessary daily activities. These may include eating, dressing, toileting, bathing and walking. The services provided are not made available by Medicare or Medicaid.
Two basic kinds of insurance exist. A "tax-qualified" plan is most pervasive. This is more popular because premiums are tax-deductible. The main qualification is that the insured must not be able to perform two or more basic functions. A "non tax-qualified" plan is a policy that requires the recipient to be incapable of performing only one basic activity each day, but premiums cannot be deducted in taxes. Tax laws are complicated, so it is advisable to seek professional advice when choosing plans. Employer group insurance is available, but may not be tax-qualified.
Services included in this coverage are home care, adult day care, hospice, Alzheimer's facilities, and assisted living. These plans also pay the expense of a live-in nurse or companion. Most expenses are reimbursed to the insured. Rates are generally determined by age and health status of the beneficiary at the time the insurance is purchased, the length of the waiting period before plan benefits begin, and any protection against future inflation.
This coverage is effective because it pays for services that are not provided by Medicare and Medicaid. These government benefits either give only short term and partial home and nursing facility care, or the beneficiary's assets must be used up before benefits kick in. Private coverage for extended care pays for home health care, which averages almost $30 per hour, and assisted living facility residence which costs approximately $3000 per month.
Most financial planners recommend the best time to purchase this insurance is when a person is in his or her mid-fifties. Premiums are less expensive if bought at a younger age, but if purchased too soon, the amount of premiums paid outweighs the benefits derived. If one obtains insurance at a later age, then premiums are very costly. Individuals should actually self-insure if their net worth, excluding housing, exceeds $2 million. If net assets are below $200,000, then one probably cannot afford the premiums. An individual is a prime candidate for Long Term Care insurance if his or her net worth is between these two numbers.
As the population lives longer, more people end up with disabilities, and in need of assisted care later in life. As people plan for retirement, long term care insurance should be addressed. While paying for this type of insurance can be costly, it can be far less than directly paying for health care and long term care. Long term care beneficiaries feel confident that they will be cared for, and that their assets will be secure for their heirs.
This coverage helps cover the expense of care for an extended period. The beneficiary can be virtually any age, and does not have to be "sick" in the clinical sense. This is simply someone who cannot carry out at least two necessary daily activities. These may include eating, dressing, toileting, bathing and walking. The services provided are not made available by Medicare or Medicaid.
Two basic kinds of insurance exist. A "tax-qualified" plan is most pervasive. This is more popular because premiums are tax-deductible. The main qualification is that the insured must not be able to perform two or more basic functions. A "non tax-qualified" plan is a policy that requires the recipient to be incapable of performing only one basic activity each day, but premiums cannot be deducted in taxes. Tax laws are complicated, so it is advisable to seek professional advice when choosing plans. Employer group insurance is available, but may not be tax-qualified.
Services included in this coverage are home care, adult day care, hospice, Alzheimer's facilities, and assisted living. These plans also pay the expense of a live-in nurse or companion. Most expenses are reimbursed to the insured. Rates are generally determined by age and health status of the beneficiary at the time the insurance is purchased, the length of the waiting period before plan benefits begin, and any protection against future inflation.
This coverage is effective because it pays for services that are not provided by Medicare and Medicaid. These government benefits either give only short term and partial home and nursing facility care, or the beneficiary's assets must be used up before benefits kick in. Private coverage for extended care pays for home health care, which averages almost $30 per hour, and assisted living facility residence which costs approximately $3000 per month.
Most financial planners recommend the best time to purchase this insurance is when a person is in his or her mid-fifties. Premiums are less expensive if bought at a younger age, but if purchased too soon, the amount of premiums paid outweighs the benefits derived. If one obtains insurance at a later age, then premiums are very costly. Individuals should actually self-insure if their net worth, excluding housing, exceeds $2 million. If net assets are below $200,000, then one probably cannot afford the premiums. An individual is a prime candidate for Long Term Care insurance if his or her net worth is between these two numbers.
As the population lives longer, more people end up with disabilities, and in need of assisted care later in life. As people plan for retirement, long term care insurance should be addressed. While paying for this type of insurance can be costly, it can be far less than directly paying for health care and long term care. Long term care beneficiaries feel confident that they will be cared for, and that their assets will be secure for their heirs.
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