Counseling Locations and Appointments
Last Updated:
8/4/2010
Buyer Beware! This is an expensive product; the language is not standardized; and it can be difficult to compare and evaluate policies!
Consumer Tips for Purchasing LTC Insurance
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Buy long term care insurance (LTC) only if you can afford it without making a lifestyle change and be sure that you have the ability to afford a 20%-50% increase in the premiums in future years. |
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Do not sign a contract or make a payment before you have shopped carefully and have read the actual contract, not just marketing materials. Understand the vocabulary in the policy - ask for any definitions in writing on insurance company letterhead. |
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Fill out the application yourself and check for accuracy. This is a legal document. You are responsible for all information. |
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Do not be sold by the emotional issues of long term care insurance - When you buy a policy, you are not buying tender loving care. What you get is protection of your assets if you should need LTC. |
| This is a major lifetime purchase and not an appropriate purchase for everyone. Take your time in making a decision. |
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Consider suggested guidelines for purchasing LTC insurance - individual annual retirement income over $30,000 and assets (excluding your home) of $100,000 to $500,000. Understand your rights under the Spousal Impoverishment Law, as described below. |
SPOUSAL
IMPOVERISHMENT FACT SHEET
Updated 5/07
The expense of nursing home care can
rapidly deplete the savings of elderly couples. In 1988, Congress enacted
provisions to prevent what has become to be call “Spousal Impoverishment,
which can leave the spouse who is still living at home in the community with
little or no income or resources. These provisions help ensure that this
situation will not occur and that the spouse still living in the community is
able to live out their lives with dignity and independence.
The
Medicare Catastrophic Coverage Act of 1988 (MCCA) established special rules for
determining income and resource (asset) eligibility for any institutionalized
person who has a spouse living in the community.
“Spousal Impoverishment”
is the popular term given to a Medicaid (Medical Assistance) provision contained
in Section 303 of the MCCA entitled “Protection of Income and Resources of a
Couple for Maintenance of the Community Spouse”.
This
act applies to couples when one spouse begins a continuous period of residence
in a nursing home and subsequently applies for Medicaid.
All non exempt assets (savings and
checking accounts, stocks, bonds, etc) owned by either spouse, jointly or
separately, are pooled as of the date of institutionalization.
The “community spouse” may
keep $20,328 or ˝ of the assets,
whichever is greater, but not more than $101,640. (The home and car
do not count as assets.) The
couple’s remaining assets are used to pay for nursing home care or other
eligible expenses until the institutionalized spouse’s assets reach the
Medicaid eligibility level of $2,500.
The community spouse’s income will be evaluated to determine how much,
if any, of the institutionalized spouse’s monthly income can be allowed for
the community spouse’s monthly maintenance allowance.
This maintenance allowance will supplement the community spouse’s own
income up to $1650/month. If shelter expenses alone exceed $495/month (30% of $1650), an additional amount, equal to the excess
will be allowed. The maximum total allowance cannot exceed $2489/month.
The institutionalized spouse also is allotted an allowance of $64/month.
A family allowance may be made if there is a dependent child, parent, brother or
sister of either spouse residing with the community spouse. The allowance is in
the amount of 1/3 of the community spouse’s maintenance allowance less any
income of the dependent individual, for each dependent family member. Local
Departments of Social Services are responsible for evaluating a couple’s
income and assets and determining eligibility.
What Constitutes a Good Policy?
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Questions to Consider When Reading a LTC Contract:
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What are the Activities of Daily Living - (ADLs)? How are the ADLs defined? |
| What level of assistance is required to access the policy benefits: hands-on assistance or verbal cueing? |
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Who makes the medical determination - your doctor, the insurance company's doctor, or both? |
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What are the tests for Alzheimer's and senile dementia? |
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Must you use the services of a care coordinator? |
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Who can you hire for Home Health Care Benefits - a family member, neighbor or must it be someone from a licensed home health care agency? |
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Are all levels of benefits paid at the same rate? |
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How are partial day home health care benefits calculated? |
| How are the days calculated for the elimination period? |
Provisions That Affect Your LTC Premiums:
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Tax Considerations:
Maryland residents who purchase LTC insurance policies after July 1, 2000 receive a one-time $500 state income tax credit. Spouses may each claim a $500 tax credit. Premiums paid must exceed $500.
Also, the Health Insurance Portability and Accountability Act of 1996 may let you deduct all or part of the premiums for a LTC insurance policy on your federal income tax providing you have a tax qualified plan and itemize your income taxes. The amount that you may deduct is based on your age at the end of the tax year and the amount of the premium paid. (See table below.) The allowable LTC amount is added to your other deductible medical expenses: Medical expenses above 7.5% of your adjusted gross income are allowable as a medical tax deduction.
Age Limit on LTC Premium Deduction
Year 2004 Year 2003
40 years old or less $260 $250
41 to 50 years old $490 $470
51 to 60 years old $980 $940
61 to 70 years old $2,600 $2,510
71 years old or older $3,250 $3,130
Click here for a List of LTC Companies approved by Maryland.