Long-Term Care Insurance Basic Information
- Long-term care insurance covers care services beyond the cost of medical treatment. Older people commonly use such services because of deteriorating health, but younger people with permanent injury or illness also can need it. The insurance does not cover loss of income through being unable to work.
- A long-term care insurance policy will normally cover the costs of helping a person who cannot perform "activities of daily living." These vary depending on the insurer, but usually cover activities such as eating, bathing, dressing and using the toilet. This can involve care in the person's home or care in a residential facility.
Most policies limit the total benefit paid in two ways. First, the policyholder must determine a daily limit on the amount of benefit she can receive. Second, the policyholder will have to set a lifetime total limit on the benefits. These two figures will affect the premiums. - There are two main types of long-term care policies. A facility care only policy, which is usually less expensive, will only cover the costs of treatment in a residential facility. A comprehensive policy will also cover the costs of treatment at the policyholder's home or any other place outside a residential facility. A patient with a comprehensive policy may choose not to submit a claim immediately while receiving care at home. This could eat into his total benefit limit, which could become a problem if he later requires residential care.
- Each policy has exclusions. The most common is it will not pay for care provided by a family member or friend, except in a purely professional context. Policies usually will not pay unless the care facility or caretaker meets a minimum degree of skill and expertise, including state-required standards. Policies will almost never pay for medical treatment or for expenses involving convenience and comfort, rather than activities of daily living.
- The premiums on a long-term care insurance policy will normally be tax deductible on two conditions. First, the policy must only pay out for 90 days of treatment for reasons related to activities of daily living or to a cognitive impairment such as Alzheimer's disease. Second, the policy must require that a doctor confirm the need for such treatment.
