Types of Long-Term Care Insurance
There are two main types of long-term care insurance: tax-qualified and non-tax-qualified policies. A tax-qualified policy must meet certain federal standards. Benefits paid to you from a tax-qualified policy are generally tax-free, and you may be able to include the premium you pay as an itemized medical deduction. A non-tax-qualified policy does not offer these advantages.

Beyond this, various options are available. Certain benefits will be standard to the policy; additional benefits may be provided in the form of a rider. The benefits you select will impact the amount of your premium. You can choose the following:

• Maximum daily benefit amount
• Length of benefit period
• Length of elimination period (if any)
• Maximum lifetime benefit

Optional benefits, which are available at an additional cost, may include:

• Monthly home-care benefit
• Inflation protection
• Coinsurance
• Premium rate guarantees
• Accelerated payment schedules
• Return of premium upon death (Refund of premium upon death in Texas)
• Non-forfeiture benefit
• Restoration of benefits
• Special benefits for couples (e.g., dual waiver of premium and survivorship benefit)

Some policies allow you to choose your mode or frequency of payment. Common modes include:

• Annually
• Monthly
• Semi-annually
• Single or multiple pay
• Accelerated payment of premium

Long-term care partnership policies may also exist in some states that help protect your assets yet may allow you to qualify for Medicaid benefits after exhaustion of the policy benefits.

Note: Not all options are available in all policies or in all states.


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