We hear it all the time; people are living longer, the system is not equipped to handle the increasing number of older Americans, and health care costs so much. One thing that can be done to safeguard your future and your finances is to take out a long term care insurance policy. LTC provides coverage for health care issues that go beyond hospital care. There are different types of plans with different eligibility requirements and costs. In this article we’ll take a look at the details.

Eligibility: To qualify for LTC benefits, there should to be a need for help completing one or more ADL’s (Activities of Daily Living which include but are not limited to bathing, dressing, transferring and toileting) or have some cognitive impairment. Some policies also require an elimination period of 20-120 days where the consumer pays for services before the policy will go into effect. In some cases, there may be no elimination days if the covered services are provided in-home and in accordance with a plan of care.

Benefits: Long Term Care Insurance generally covers services such as Home Care, assisted living, adult day services, Respite, Hospice, nursing home and dementia facilities. Many people like this because they know they will not have to depend on children or family. Another benefit is that it can keep seniors from exhausting their savings. In addition, premiums paid may qualify as an income tax deduction and benefits are generally not counted as income.

Types of Policies: Remember that premiums can be costly if you wait too long to purchase.

1. Tax Qualified (TQ): most common type. This type of LTC requires that a person need care for at least 90 days and be unable to perform two or more ADL’s without substantial assistance or they need to require care for at least 90 days and need substantial assistance due to a severe cognitive impairment. Benefits paid are not taxable

2. Non-Tax Qualified (TQ): Requires a "trigger" condition or some type of medical necessity. The doctor of the patient or one from the insurance company must state that the patient needs care before the policy will take effect. The inability to do just one ADL is required for this type for policy. Walking is considered an ADL for NTQ policies. The taxability of these benefits has not yet been determined by the Treasury Department and is open to interpretation.

Fewer Non–Tax Qualified policies are available because consumers want tax deductions. When choosing a type of policy, it is advised that you seek good council and thoroughly review the pros and cons of each type.

Once a policy is purchased, the language cannot be changed and the policy cannot be cancelled due to health reasons, only non-payment. Most benefits are paid on a reimbursement basis. Some policies offer different per-day rates. In any event, consumers are encouraged to get all the facts and figures of any policy before choosing to purchase.

Kristen Sheston is the Assistant Administrator at The Continental at St. Joseph’s, the leading assisted living community in southern Iowa located in Centerville