Long-Term Care
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Long-Term Care
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for Answers to Your Long-Term Care Questions |
- Benefits paid to chronically ill individuals. To qualify as
chronically ill, the insured must be:
a) unable to
perform, without substantial assistance (including standby assistance) from another
individual, at least two out of six Activities of Daily Living (ADLs) due to a loss of
functional activity that will last at least 90 days in length, or
b) require substantial supervision to protect the individual from threats to health and
safety due to a severe cognitive impairment.
The six ADLs are: eating, toileting, transferring, bathing,
dressing and continence.
- Benefits distributed under tax qualified long-term care
insurance plans are distributed income tax free. Premiums paid for this coverage may be
tax-deductible if the insured itemizes medical expenses (must exceed 7.5% of adjusted
gross income). In addition, there are maximum deduction limits based upon age as follows:
Age |
1998 Limits |
Less
than 41 |
$210 |
41-50 |
$380 |
51-60 |
$770 |
61-70 |
$2,050 |
71
and over |
$2,570 |
- Insureds have a "triple trigger" method of
qualifying for benefits, as follows:
a) inability to
perform two of five ADLs, or
b) suffers a medically diagnosed cognitive impairment, or
c) physician's certification of the need for long-term care
services (often called "medical necessity").
- The tax consequences of benefits distributed by
non-qualified plans are currently unknown. Insurers are required to distribute Form
1099-LTC on all long-term care benefit payments. The Treasury Department has only said
that tax qualified plans will receive the favorable tax treatment outlined above.
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