Long-term care insurance

Basics
In-home or nursing home care required by an elderly or disabled individual can be very expensive. Most types of insurance do not provide coverage for such care, the main exception being Medicaid, which provides coverage for qualified low-income individuals. Under Medicaid, individuals have a restricted choice of providers.

Long-term care insurance (LTCI) fills the gap in most health insurance policies, providing coverage for long-term care without requiring the individual to impoverish him/herself as is required for Medicaid coverage.

LTCI premiums depend on the level of benefits:


 * skilled nursing care--the highest level of physician directed care provided in traditional nursing homes,
 * intermediate nursing care--similar to skilled nursing care but provided occasionally instead of daily,
 * custodial care--assistance with daily tasks, not necessarily ordered by a physician,
 * home health care--care provided part-time in the home, and
 * adult day care--similar to child day care but for adults.

LTCI policies may include other features similar to health insurance policies such as waiver of premium during benefit periods, elimination periods, and limits on duration of benefits.

Source: M Dalton, J Dalton, "Personal Financial Planning: Theory and Practice," Dalton Publishing, St. Rose, Louisiana, 2001.

LTCI premiums or care are a qualified medical expense that can be paid from a Health Savings Account or itemized as a medical expense (subject to AGI restrictions) from the tax return, subject to age restrictions. See [http://www.irs.gov/pub/irs-pdf/p502.pdf IRS Pub. 502].

Papers

 * Retirement Planning's Greatest Gap: Funding Long-Term Care by Kaplan, Richard L., Lewis & Clark Law Review, Vol. 11, No. 407, 2007
 * The Role of Private Insurance in Financing Long Term Care by by Howard Gleckman IB#7-13 (September 2007)

Links

 * IRS Pub. 502, Medical and Dental Expenses