Long - Term Care

Which of the following statements about long term care insurance is most CORRECT?

All long-term care policies must be guaranteed renewable. (All long - term care policies sold today must be guaranteed renewable. This means that the insurer cannot cancel the policy and must renew coverage each year, as long as premiums are paid. While at one time many nursing home policies required a hospital stay before confinement to a nursing home in order for benefits to be paid, this is no longer the case).

A long term care policy can exclude or limit coverage for all of the following EXCEPT:

Alzheimer's Disease ( A long-term care policy can exclude or limit coverage for mental or nervous disorders (except for Alzheimer's disease), alcoholism and drug addition, illness resulting from war, treatment provided in a government facility, preexisting conditions, and services for which benefits are available under Medicare or another government program).

MAG Trading Co. established a tax-qualified, long-term care insurance plan for its employees. Which of the following statements is NOT Correct?

Benefits received from the plan are subject to income tax. (If MAG Trading Co. establishes a tax-qualified, long - term care insurance plan for its employees, any premiums it pays are excludable from the employee's income. In addition, MAG Trading can take a tax deduction for the premiums paid, which are considered a necessary business expense for tax purposes. Amounts received under the plan are excluded from income as amounts received for personal injuries and sickness).

Which of the following is a common benefit trigger for a long-term care policy?

Cognitive or Mental Impairment. (A benefit trigger is an event or condition that must occur before policy benefits become payable. under the Health Insurance Portability and Accountability Act of 1996 (HIPPA), the individual must be diagnosed as chronically ill to trigger benefits. Prior hospitalization can no longer be used as a trigger. Diagnosis of chronic illness can be based on two conditions: Physical or cognitive illness. The physical diagnosis of a chronically ill individual is one who has been certified as being unable to perform at least two activities of daily living (ADLs), which are defined as eating, toileting, transferring (getting out of bed), bathing, dressing, and continence. A long-term care policy must take into account at least five of these (ADLs). An individual would also be considered chronically ill if he requires substantial supervision to protect his health or safety because of severe cognitive impairment and if the condition was certified within the previous 12 months).

Long-term Care policies can:

Exclude coverage for a loss that is the result of a preexisting condition that occurred two months before the effective date of coverage. (Long-term Care insurance policies may not condition eligibility for benefits on prior hospitalization without also offering a policy with similar benefits that is not subject to such a condition. Coverage cannot be excluded, canceled, or otherwise terminated because the insured has Alzheimer's disease or a related disorder, nor can a condition of eligibility for benefits be based on the diagnosis of terminal or chronic illness, Most long-term care policies do not cover conditions that existed during the six months before the policy effective date).

Long-term care policies can limit or exclude coverage for all of the following EXCEPT:

Family History of Heart Condition (Long-term care policies can exclude coverage for, among other things, preexisting conditions or diseases, treatment provided in a government facility that is not required by law, and intentionally self-inflicted injury. Coverage cannot be limited or excluded based on an individual's family history of heart conditions).

Which of the following statements regarding a noncancelable long-term care insurance policy is CORRECT?

It can be cancelled for nonpayment of premiums. (Individual long-term care policies must contain a noncancelable or guaranteed renewable provision. "Noncancelable" Means that the insured has the right to continue the policy in force by the timely payment of premiums. the insurer has no unilateral right to change any provision of the insurance or the premium rate. Except for nonpayment of premiums, no - long term care contracts can be canceled for not renewed on the basis of the insured's age or mental or physical health deterioration).

If a long term - care policy is considered tax qualified:

Its benefits will qualify for tax-exempt treatment. (Benefits payable under long-term care policies are not taxable to the insured, provided the policy is considered tax qualified. This means that the policy's provision must conform to certain standards and guidelines set forth by the Internal Revenue Code and the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

Long Term Care Health Insurance Purpose:

Long-term Care insurance covers care generally not covered by health insurance, Medicare, or Medicaid... Long-term care is an issue because people are living longer. As people age, many times they need help with everyday activities of daily living or require supervision due to sever cognitive impairment.

Benefits payable under long-term care policies are:

Not taxable to the insured, provided the policy is considered tax qualified.

A type of long-term care insurance benefit designed to provide nonprofessional family caregivers a brief rest period by paying for short-term professional home health care is called:

Respite Care Benefit: Coverage for respite care allows the insured to be temporarily moved to a nursing facility or pays for subsitiute caregiver to provide care in the insured's home for short periods, so the family can rest from caregiving activities.

The cost of a long-term care insurance (LTC) policy is based on all the following factors EXCEPT:

Whether the coverage is provided under a Medicare or supplement policy. (The Cost of LTC policy is based on a number of factors: The insured's age and health, the type and level of benefits provided, the inclusion or absence of a deductible or probationary period and the length of that period, and whether or not options or riders are included with the policy (such as the option to purchase additional coverage in the future). Whether an insured is covered by a Medicare supplement policy has no impact on the cost of a LTC policy).