Long term care insurance is a type of policy which provides funding for types of care that are not covered regular insurance programs and government programs such as health insurance, Medicare, and Medicaid. This type of insurance is mainly sold in the United States and in the United Kingdom to individuals of all ages that are in need a daily assistance with ADLs or activities of daily living such as bathing, dressing, walking, eating, bathing, etc. Premium payments on long term care insurance may qualify to be tax deductible depending on how old the customer is which is definitely a good thing.
A typical long term care insurance policy will cover assisted living home costs, home care costs, adult daycare costs, nursing home costs, and a variety of other senior living care. This comes in very handy for many people because programs like Medicaid do not cover assisted living fees.
There are two main types of policies in respect to US income tax laws and they are:
Tax qualified plans are very common and the benefits you receive from these policies are non-taxable. Usually a Tax qualified plan require that the customer expect to need at least 90 days of care and not be able to perform at least 2 activities of daily life without help from a caregiver or need care for at least 90 days as a result of a cognitive impairment such as Alzheimer’s Disease.
Non-tax qualified plans are more simple in that they only require a doctors order in conjunction with a insurance representative to trigger the policy to start paying for care. For non-tax qualified long term care insurance the insured only has to be unable to perform one ADL. As far as taxes go it is somewhat of a gray area but the benefits received under one of these plans can be taxed by the IRS.
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