What is Long Term Care Insurance?

Long term Care Insurance pays for nursing home or in-home care for you when you are disabled. There are many companies offering long-term care insurance today and the State of California has a plan called the “Partnership Plan” which provides special protections for your estate if you later need Medi-Cal benefits.

Planning for long-term care is a complex issue. Although many people will never need long term care others may need services provided either in their homes or in a skilled nursing facility.

Some policies cover care in the home, others require you to be in a skilled nursing facility. Policies may also have different requirements before you are eligible to begin receiving benefits. For example, some policies may require that you need assistance with only 2 “ADLs” (Activities of Daily Living), while other policies may require that you need assistance with 3 or even 4 ADLs.

Some premiums may be tax deductible when you purchase the insurance but you will pay taxes on the benefits. Others premiums may not be tax-deductible but the benefit may be non- taxable.

In some cases the insurance company’s ability to raise your rate is limited because they have to raise the rate of the whole class of people to which you belong; in other cases the insurance company can raise your rate regardless of whether other people have their rates raised, too. Some policies provide inflation protection. Others don’t. Some require a hospital stay before you may be eligible for benefits. Others don’t. Some policies cover custodial care and others don’t. Additionally, each policy will also have a cap on the total amount of benefits that may be paid and these may be calculated differently. Assume a policy states that it will pay $100 a day for 365 days. Even if your care only costs only $50 a day that doesn’t necessarily mean the insurance company will pay for more than 365 days, even though this is only ½ of the amount the insurance company stated it would pay for your care.

Still other differences include the type of person whose care may be eligible for compensation. In some cases, the insurance company may pay a family member to take care of you while in other cases you may need to have a licensed registered nurse providing care. Each policy is different and you should consult with several long-term care insurance agents, and an attorney, before you decide to make the costly and very important decision to purchase long-term care insurance.

For additional information please call Brian Sheppard at (661) 775-9110.