Long Term Care Policy Features and Options

Alternative Plan of Care - Allows the policy holder to receive benefits for care or services not specifically defined within a policy.

Bed Reservation - Reserves a patient's bed in a nursing home or assisted living facility if the patient needs to leave the facility for temporary hospitalization or go home for a holiday.

Benefit Period - The lifetime value of a policy.

Daily Benefit - The amount of insurance benefit in dollars a person chooses to buy for long-term care expenses.

Elimination Period - A type of deductible; the length of time the individual must pay for covered services before the insurance company will begin to make payments.

Inflation Protection - A policy option that provides for increases in benefit levels to help pay for expected increases in the costs of long-term care services.

Nonforfeiture Benefits - A policy feature that returns at least part of the premium to you if you cancel your policy or let it lapse.

Restoration of Benefits - When benefits under a policy are paid, and the maximum lifetime benefit is restored to its original maximum if the policy holder does not require care for a designated period of time.

Spousal Discount - A discount given when both spouses apply for coverage with the same company.

Third Party Notice - A benefit that lets you name someone who the insurance company would notify if your coverage is about to end due to lack of premium payment. This can be a relative, friend, or professional such as a lawyer or accountant, for example.

Waiver of Premium - When the premium does not have to be paid while receiving benefits

Tax Qualified vs Non Tax Qualified*

Tax-Qualified Policies	Non-Tax Qualified
1. Premiums can be included with other annual uncompensated medical expenses for deductions from your income in excess of 7.5% of adjusted gross income up to a maximum amount adjusted for inflation.	1. You can't deduct any part of your annual premiums.
2. Benefits that you may recieve will not be counted as income.	2. Benefits that you may receive may or may not count as income. The US Department of the Treasury has not yet ruled on this issue.
3. Benefit triggers may be more restrictive than those which may be allowed in non tax-qualified policies. The federal law requires you be unable to do 2 of 5 out of 6 possible ADLs without substantial assistance.	3. Policies can offer a different combination of benefit triggers. Benefit triggers may not be restricted to 2 of 6 ADLs
4. "Medical necessity" can't be used as a trigger for benefits.	4. "Medical necessity" and / or other measures of disability can be offered as benefit triggers.
5. Disability must be expected to last for at least 90 days.	5. Policies don't have to require that the disability be expected to last 90 days.
6. For cognitive impairment to be covered, a person must require "substantial supervision."	6. Policies don't have to require "substantial supervision" to trigger benefits for cognitive impairments.

* A Shopper's Guide to Long-Term Care Insurance, National Association of Insurance Commissioners.