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Is Long-Term Healthcare Insurance a Good Investment?

Long-term care (LTC) insurance policies are good investments because in exchange for premiums, insurers become responsible for covering services that policyholders would pay for out-of-pocket; therefore, protecting the financial assets of the policy owners. These plans also have several benefits and features built in to make these plans affordable. LTC coverage can be bought to last a couple of years or for the rest of the policyholders' lives.

  1. Why Purchase Long-Term Care Insurance?

    • LTC insurance policies pay for several services to help care for policyholders who need help with daily activities. Some of these services include skilled nursing care, hospice and respite care and physical, occupational, rehabilitation and speech therapy. These plans also cover equipment purchases, transportations expenses as well as home modifications such as installing wheelchair ramps and grab bars.

    Types of LTC Plans Available

    • There is a wide range of choices and policy benefits applicants can choose when shopping for LTC plans. Individuals can choose a maximum daily benefit amount to pay for services or a monthly amount to allow for funds to be used on certain days. Policy coverage amounts can be capped at certain limits chosen by the applicants or benefits payments can last as long as the policyholder needs long term care services. Applicants can also choose comprehensive policies-covers care and services at policyholders' homes or facilities- or facility use only plans which only pays for services in assisted living facilities and nursing homes.

    Tax Qualified vs. Non-Qualified LTC Plans

    • Individuals can purchase either tax- or non-qualified plans. Under tax-qualified plans, premiums are treated as medical expenses and can be deducted on the policy owners' tax returns. Benefits from tax-qualified LTC plans are paid out tax-free and they kick in once the policyholder's needs help with at least the of the six Activities of Daily Living (ADL). The six ADLs are toileting, bathing, eating, dressing, transferring and continence. Non-qualified LTC plans do not have any tax benefits, but are less restrictive. Policyholders can access LTC benefits for care lasting less than 90 days that isn't allowed under tax-qualified plans. However, some non-qualified plans may require policyholders to need assistance with 3 ADLs before paying benefits.

    What Long Term Care Insurance Doesn't Cover

    • LTC plans have several exclusions as well. They do not cover services or care for self-inflicted injuries, suicide attempts, war injuries, treatments for addictions to illegal drugs or prescription medications not taken correctly, alcoholism and treatments performed in government facilities or outside of the United States. Individuals who suffer from certain medical conditions such as cancer, AIDS, Parkinson's and Alzheimer's are not eligible for LTC coverage.

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