The Types Of Long Term Care Insurance Policies
Some people choose to pay out-of-pocket expenses for their long term care
, unaware of the financial disasters that could ruin their lifetime savings. After you've worked hard your entire life, it's distressing to see your entire finances used only for nursing care, although it has been saved up for your children's college or future business.
Long-term care insurance saves you from the guilt of using your own money in paying for long term care services. Purchasing LTCi policies prepares you as time flies by when you will need long term care coverage for your chronic illness or disability. In fact, financial experts advise people who are in their late 50's or early 60's to purchase long-term care insurance. That age is a perfect timing wherein the cost of premiums is quite affordardable and the person's health is still good.
There are three basic types of long term care insurance policies. All of these LTCi policies help you receive decent long term care at the time you most need it, but each types has its own role or variations. The type of LTCi varies on the person's needs.
Reimbursement LTC Insurance Policy
This type is the most common LTCi policy. As the name suggests, the policy would recompense you for the actual charges or expenses on your long term care, but it should not exceed your daily, monthly, or weekly benefit limit.
The policy may contain a written agreement that states that if the long term care cost does not consume all the benefit amount, the remaining amount can be used in the succeeding years. Therefore, if you purchase a $200 daily policy and your charges cost $150 a day, you'll be reimbursed with $150 and the balance will stay in your treasury. This can be paid by the private insurer, or you can pay the policy first and then the remaining will be continued by the insurer.
This policy type is much expensive than the reimbursement policy. A "plan of care" is required and must be approved. This policy only pays for the actual days you received the care from a nursing home or assisted living faciltiy.
Unlike the reimbursement policy, an indemnity plan is more manageable and controlled. The insurer will give you a check that shows the allowable daily benefit amount of your indemnity policy. You could use that either as incurred expenses or save it for future use. It relieves you from the hassle of filing claims and issuing receipts or invoices.
The purchase of indemnity policy is advisable for younger people, not those above their mid-60s. This is because indemnity policy pays out the maximum benefits, not the actual expenses. The premiums are much higher than the reimbursement policy, and you receive back the exact amount of your policy. For example, if you have a policy that pays $200 a day benefits and your total expense is only $150 a day, you still get the $200 back.
Most of the states in America are using this type of policy. This policy makes it easy for people to qualify on Medicaid program, regardless if they have already exhausted their policy benefits or have assets that exceed the maximum asset limit.
Primarily, partnership policies were designed to lessen Medicaid expenditures on LTC by allowing Americans finance their own long term care needs. However, the program has gone beyond its goals, and it solved the woes of billions of Americans for Medicaid eligibility. Qualified partnership policies offered nowadays have asset disregard, tax deductions, inflation protection, and reciprocity agreement.
by: Marcia Cross
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