Purchasing a long term care insurance policy will help you to cover the costs of long term care. This type of insurance will pay for nursing home care, home health care, and personal or adult day care.
Medicaid eligibility for long-term care
Depending on your state, the requirements for Medicaid eligibility for long-term care insurance vary. However, most states require that applicants need nursing home level care. In addition, applicants must be financially qualified to receive Medicaid benefits.
The amount of income that is required to qualify for long-term care depends on your age and state. Some states require that individuals contribute a portion of their monthly income to Medicaid.
Indemnity or expense incurred policies
Depending on your needs, there are two main types of long term care insurance: indemnity and reimbursement policies. The difference between these two types of policies is in the amount and type of benefits provided.
An indemnity policy is a type of LTC insurance that pays a fixed amount of money each day, regardless of the actual amount of the care you receive. An indemnity policy is usually more expensive than its reimbursement counterpart.
Coverage for nursing home care, home health care and personal or adult day care
Approximately two-thirds of Americans will need long-term care at some point in their lives. This care can be provided in a variety of settings including nursing homes, home health care, adult day care and community-based services. However, the cost of these services can be very expensive.
Most medical insurance plans do not cover long-term care. Instead, you can get long-term care coverage through a variety of private payment options, including life insurance, annuities and reverse mortgages.
Taxes on long-term care insurance amount exceed $390 a day
Depending on the type of long-term care insurance policy you have, you may be able to claim a tax deduction for the premium. These deductions are typically referred to as the Long-Term Care Insurance Tax Credit. There are also some states that offer tax credits for long-term care insurance.
According to the IRS, tax-qualified long-term care insurance benefits are generally tax free. The amount of benefits you receive from a qualified long-term care insurance plan cannot exceed $390 per day.
Indemnity policies pay up to a fixed benefit amount
Historically, fixed indemnity policies have been understood as an income replacement product. But, some employers have misused this product to avoid regulations.
The ACA does not apply to these excepted benefits, but some state regulators may refuse to approve a plan that does not have a proper fixed benefit design. And some brokers may make consumers believe the product is regulated under the ACA.
Buying cheap long-term care insurance
Buying cheap long-term care insurance may be necessary for those who are injured or suffer from a chronic illness. Having the right policy can reduce the financial and psychological stress on your family, and allow you to continue your independence.
If you have not purchased a long-term care policy yet, consider talking to your friends about their experiences. You may be able to obtain insurance for a reasonable price through an employer-sponsored group policy.