The Wall Street Journal
Weekend Investor – Conquering Retirement – March 09, 2013
Expecting the Unexpected When It Comes to Retirement Planning
By Ellen E. Schultz
The appeal of long-term care coverage is undeniable. Medicare covers skilled nursing care but doesn’t pay for continuing care in nursing homes or assisted-living facilities. Nor does Medicare pay for home attendants, who provide personal care, such as dressing or bathing, which can easily cost $400 or more a day.
What does it pay for? Make sure the policy covers care at a range of facilities, including nursing homes, assisted-living facilities, adult day-care and hospices. Newer policies reimburse for at-home care, even if not from a certified health-care professional, while old policies might require the home-care attendant to be a certified nurse.
How is eligibility defined? An individual might be unable to live independently, but that doesn’t mean his long-term-care coverage will kick in.
How much does it pay? Many people overestimate what their policy will pay. It might cover a percentage of certain costs or a percentage of “usual and customary” charges.
Can you afford coverage? Insurers can’t refuse to renew your coverage. But as premiums rise, the policy might become unaffordable.
Should you replace your coverage? If you decide your current insurance doesn’t stack up, make sure you are able to get a new policy before dropping your old one.
Comments March 09, 2013
In 1996, Congress passed the Health Insurance Portability and Accountability Act (HIPAA), ensuring that long term care insurance policies that meet certain standards receive favorable tax benefits. With these tax-qualified long term care insurance plans your benefits are tax free and you can also deduct long term care insurance premiums (subject to your age and income). Benefits are payable when a licensed health care practitioner certifies that you are unable to perform at least two activities of daily living without substantial assistance for a period expected to last at least 90 days or you require substantial supervision to protect yourself due to a severe cognitive impairment such as Alzheimer’s disease.
Traditional Long Term Care Insurance policies are subject to future rate increases if you are still paying for your policy, based on approvals from state insurance commissioners. Once you complete payments (e.g.: on your 10th payment of a 10-Pay plan or when you begin receiving benefits) you are not subject to rate increases. Combination Life/Long Term Care Insurance policies are not subject to rate increases for policyholders. Note: Combination policies are not tax-qualified, yet have the same requirements for benefit eligibility. We provide a comparison of Traditional and Combination policies here:
Since pricing can vary greatly between carriers, work with an independent insurance specialist that is contracted with numerous carriers and offers both Traditional and Combination policies. Let us research the market and design a long term care solution to meet your needs and budget at:
Aaron Skloff, AIF, CFA, MBA
CEO – Skloff Financial Group
Aaron Skloff, Accredited Investment Fiduciary (AIF), Chartered Financial Analyst (CFA) charter holder, Master of Business Administration (MBA), is the Chief Executive Officer of Skloff Financial Group, a NJ based Registered Investment Advisory firm. The firm specializes in financial planning and investment management services for high net worth individuals and benefits for small to middle sized companies. He can be contacted at www.skloff.com or 908-464-3060.