The Elements of a Long-Term Care Insurance Policy

The 4 key elements of a policyRiders to consider

Benefit TriggerState Partnership Programs

Tax Qualified

Benefit Payments

Benefit Multiplier

Elimination Period

Inflation Protection

4 Key Elements of a Policy

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

Benefit Payments

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 120Day Multiplier options: 730,1095,1460,1825,2190,2920 or 3650

Benefit Multiplier

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 PeriodWaiver of Home Care Elimination Period (1st day Home Care)

Elimination Period

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.

Inflation Protection

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

Riders to Consider

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

Benefit Trigger

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 InflationAge 61- 75 – some form of inflation protectionAge 76 and older – no inflation protection is required

State Partnership Programs

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 PremiumAge 40 or Less $370Age 41-50 $700Age 51-60 $1,400Age 61-70 $3,720Age 71 and older $4,660

This is not meant as tax advice. We recommend you seek guidance from your tax advisor or counsel.

Tax Qualified