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The Elements of a Long-Term Care Insurance Policy

The Elements of a Long-Term Care Insurance Policy. The 4 key elements of a policy Riders to consider Benefit Trigger State Partnership Programs Tax Qualified. 4 Key Elements of a Policy. Benefit Payments Benefit Multiplier Elimination Period Inflation Protection. Benefit Payments.

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The Elements of a Long-Term Care Insurance Policy

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  1. The Elements of a Long-Term Care Insurance Policy The 4 key elements of a policy Riders to consider Benefit Trigger State Partnership Programs Tax Qualified

  2. 4 Key Elements of a Policy • Benefit Payments • Benefit Multiplier • Elimination Period • Inflation Protection

  3. Benefit Payments This is the benefit amount that you want to be covered for long-term care expenses. Most policies have a choice of daily or monthly maximums that are reimbursable once the benefit triggers have been met. Daily maximums range from $50-$400/day in $5 or $10 increments Monthly maximums range from $1,500-$12,000 in $50 or $100 increments

  4. Benefit Multiplier The Benefit Multiplier is a factor based on time (months or days) used to calculate your initial Coverage Maximum, also know as your total pool of money Example: $3,000 x 36 month = $108,000 (monthly max) (benefit multiplier) (Pool of money) If the benefit payments are less than your daily or monthly maximum, benefits will last until your pool of money is exhausted. Monthly Multiplier options: 24,36,48,60,72,96, or 120 Day Multiplier options: 730,1095,1460,1825,2190,2920 or 3650

  5. Elimination Period An elimination period is similar to a deductible. When you need long-term care, it is the time period during which you must pay for your own care without being reimbursed under the policy. Elimination Periods: 30, 60, 90, 180 or 365 days Riders of note: Calendar Day Elimination Period Waiver of Home Care Elimination Period (1st day Home Care)

  6. Inflation Protection Inflation protection helps the value of your coverage keep up with the rising costs of care, allowing for annual increases in your daily or monthly maximum and pool of money for as long as your coverage remains in force. Options Include: Compound Inflation (3%, 4%, 5%) Simple inflation (5%) Future Purchase Option No Inflation Protection Please note: inflation is a critical choice when qualifying for partnership coverage. Please review the appropriate inflation choice based on the client’s age.

  7. Riders to Consider • Shared Care: The ability to access your spouse’s benefits should you exhaust the benefits on your policy • Survivorship: With this rider, upon the demise of one spouse, the surviving spouse’s policy premium is paid up for life. • Waiver of Elimination Period for Home Care: This waives your deductible should you need care at home • Calendar Day Elimination Period: This follows the calendar rather than service day for your deductible • Return of Premium: This returns your premium to your estate, less claims upon your demise • Restoration of Benefits: This restores your benefits back to day one should you recover from your condition and no longer need benefits for a period of 180 days or more

  8. Benefit Trigger Your benefit trigger stipulates when you are eligible for benefits. Policies typically require one of these 2 triggers: • That you need assistance for 90 days or more with 2 or more Activities of Daily Living (ADL) (Bathing, Dressing, Eating, Transferring, Toileting & Continence) • Or that you require substantial supervision as a result of a severe cognitive impairment

  9. State Partnership Programs Many states offer Partnership programs. These programs usually work on a dollar for dollar basis. If you purchase a long-term care insurance policy, that qualifies for Partnership status, with a benefit pool of $108,000, and you were to exhaust your benefits. Your state would allow an asset disregard of $108,000 (dollar for dollar) should you apply for Medicaid. This would enable you to save some of your assets as they are not counted towards the Medicaid thresholds. In order to qualify for Partnership status you do have to purchase an inflation rider based on age requirements. Age 60 or younger – Compound Inflation Age 61- 75 – some form of inflation protection Age 76 and older – no inflation protection is required

  10. Tax Qualified A tax deduction is available to those tax-payers that itemize. A medical expense deduction is allowable to extent that such expenses (including payment of eligible LTCI premium) exceeds 10% of Adjusted Gross Income. Please review code to determine income eligibility and phase in period. Attained Age in Tax Year Limitation on Premium Age 40 or Less $370 Age 41-50 $700 Age 51-60 $1,400 Age 61-70 $3,720 Age 71 and older $4,660 This is not meant as tax advice. We recommend you seek guidance from your tax advisor or counsel.

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