Two types of standard long term care insurance plans are available. Understanding both types will help you to make the best decision for your circumstances and needs.
Tax Qualified Plans:
Long term care insurance plans that follow the federal HIPPA, or Health Insurance Portability and Accountability Act, are known as tax qualified plans. In order to qualify for this type of plan, you must need help with 2 out of the 6 activities for daily living for more than 90 days. The 6 activities for daily living are:
- Bathing
- Dressing
- Eating
- Toileting
- Continence
- Transferring
The federal HIPPA laws are designed to protect the consumer. It insures that your long term care insurance is actually for long term care, greater than 90 days. These plans are guaranteed to be renewable, and the benefits received are not considered taxable income. As long as you continue to pay your premium, your insurance will not be cancelled.
Non Tax Qualified Plans
Long term insurance plans that are non tax qualified allow you to access your benefits much quicker than with the tax qualified plan. You will need to prove with your attending physician that you need help with only one of the above activities for daily living, with the addition of walking to the list. These plans are typically more expensive than the tax qualified, but again, begin paying benefits much quicker.
