2. Benefits you receive and use to pay for long-term care services generally aren’t counted as income. Benefits you receive from policies that use the expense-incurred method may be taxable if the benefits are greater than the costs of long-term care services. All benefit payments up to the federally approved per diem (daily) rate are tax-free from policies that use the indemnity or disability methods, even if the benefits are greater than your expenses. 2. The benefits you receive may or may not count as income. Congress and the U.S. Department of the Treasury haven’t clarified this area of the law. 3. To trigger the benefits under your policy, the federal law requires you to be unable to do two ADLs without substantial assistance. 3. Policies can offer a different combination of benefit triggers. Benefit triggers aren’t restricted to two ADLs. 4. Policies can’t use “medical necessity” as a benefit trigger. 4. The benefit triggers can be “medical necessity” and/or other measures of disability. 5. Policies can require that a person be chronically ill or have disability lasting at least 90 days. 5. Policies don’t have to require the disability to last at least 90 days. 6. Policies that cover cognitive impairment must require “substantial supervision” as a benefit trigger. 6. Policies don’t have to require “substantial to trigger benefits for cognitive impairments. Whether you buy a tax-qualified or a non-tax-qualified policy, consult with your tax consultant or legal advisor about the tax consequences for you. Pooled Benefits and Joint Policies You may be able to buy a long-term care insurance policy that covers more than just one person, or more than one kind of long-term care service. The benefits these policies provide often are called “pooled benefits.” One type of pooled benefit covers more than one person, such as a husband and wife, or domestic partners, or two or more related adults. This type of benefit sometimes is called a policy” or a “joint benefit.” The total benefit usually applies to all of the individuals the policy covers. If one covered individual collects benefits, that amount is subtracted from the total policy
Be sure you put correct and complete information on your application. Don’t be misled by long-term care insurance marketers who say your medical history isn’t important—it is! Give correct information. If an agent fills out the application for you, don’t sign it until you’ve read it. Be sure that all of the medical information is accurate and complete. If it isn’t and the company used that information to decide whether to insure you, it could refuse to pay your claims and even cancel your policy. Never pay in cash. Use a an electronic bank draft made payable to the insurance company, or a credit card. Be sure to get the name, address, and telephone number of the agent and the company. Get a local or toll-free number for both the agent and the company. If you don’t get your policy within 60 days, contact the company or agent. You have a right to expect prompt delivery of your policy. When you get it, keep it somewhere you can easily find it. Tell a trusted family member or friend where it is. Be sure you look at your policy during the free-look period. If you decide you don’t want the policy soon after you bought it, you can cancel it and get your money back. You only have a certain number of days after you get the policy to tell the company you don’t want it. How many days you have depends on the “free-look” period. In some states the insurance company must tell you about the free-look period on the cover page of the policy. In most states you have 30 days to cancel, but in some you have less time. Check with your state insurance department (see the list of state insurance departments, agencies on aging and state health insurance assistance programs starting on page 52) to find out how long the free-look period is in your state. If you want to cancel: Keep the envelope the policy was mailed in. Or ask the agent for a signed delivery receipt when he or she hands you the policy. Send the policy to the insurance company along with a short letter asking for a refund. Send both the policy and the letter by certified mail. Keep the mailing receipt. Keep a copy of all letters. It usually takes four to six weeks to get your refund.
How does the policy decide when you’re eligible for benefits? (Refer to page 18) 13. Which benefit triggers does the policy use to decide if you’re eligible for benefits? (It may have more than one.) • Unable to do activities of daily living (ADLs) • Cognitive impairment • Doctor certification of medical necessity • Prior hospital stay • Bathing is one of the ADLs When do benefits start? (Refer to page 19) 14. How long is the waiting period before benefits begin for: • Nursing home care? • Assisted living facility care? • Home health care? • Waiting period—Covered service days or calendar days? 15. Are the waiting periods for home care consecutive? Policy 1 Policy 2 yes/no yes/no days days yrs yrs yes/no yes/no yes/no yes/no yes/no yes/no yes/no yes/no yes/no yes/no yes/no yes/no days days days days days days service days service days yes/no yes/no 16. How long will it be before you’re covered for a pre-existing condition? (usually 6 months) 17. How far back will the company look at your medical history to determine a pre-existing condition? (usually 6 months) Does the policy have inflation protection? to page 20) 18. Are the benefits adjusted for inflation? 19. Are you allowed to buy more coverage? If yes, • When can you buy more coverage? • How much can you buy? • When can you no longer buy more coverage? 20. Do the benefits increase automatically? If yes, • What is the rate of increase? • Is it a simple or compound increase? • When do automatic increases stop? 21. If you buy inflation coverage, what daily benefit would you receive for Nursing home care: • 5 years from now? • 10 years from now? Assisted living facility care: • 5 years from now? • 10 years from now? Home health care: • 5 from now? • 10 years from now?
10. Will the paying long-term care benefits decrease the policy’s death benefit and cash value? 11. Will an outstanding loan affect the long-term care benefits? 12. Did you get an illustration of guaranteed values? If yes, do the policy values zero at some age on a guaranteed or midpoint basis? If so, at what age? yes/no yes/no yes/no yes/no yes/no yes/no
West Virginia Dept. of Insurance P.O. Box 50540 Charleston, WV (304) 558-3354 1-888-879-9842 Fax: (304) 558-0412 www.wvinsurance.gov West Virginia State Health Insurance Assistance Program 1-877-987-4463 (304) 558-3317 Fax: (304) 558-0004 West Virginia Bureau of Senior Services 1900 Kanawha Blvd, East Charleston, WV 25305-0160 (304) 558-3317 877-987-3646 Fax: (304) 558-5609 Office of the Commissioner of Ins. State of Wisconsin P.O. Box 7873 125 South Webster Street Madison, WI 53703-3474 (608) 266-3585 Fax: (608) 266-9935 Wisconsin SHIP (608) 266-1865 800-242-1060 Fax: (608) 267-3203 TTY: 888-701-1251 Wisconsin Bureau of & LTC Resources Dept. of Health and Family Services 1402 Pankratz St., Ste. 111 Madison, WI 53704-4001 800-815-0015 Fax: 608-246-7001 Wyoming Department of Insurance 106 East 6th Avenue Cheyenne, WY 82002-0440 (307) 777-7401 Fax: (307) 777-2446 Wyoming State Health Insurance Information Program 1-800-856-4398 Fax: (307) 777-2446 Wyoming Aging Division Department of Health 6101 Yellowstone Road, Room 259B Cheyenne, WY 82002 (307) 777-7986 or 1-800-442-2766 Fax: (307) 777-5340