Long Term Care Insurance Tax Advantages
Long Term Care Insurance is one of the most valued insurance plans in the market in today's society. Certain types of long term care insurance policies also have some very nice tax advantages. With more and more people trying to purchase Long Term Care Insurance to protect themselves in the late part of their lives, the demand for this type of insurance has gone sky rocketing high. Long Term Care is usually referred to as Nursing Home Care or extreme Rehabilitation Care after an accident or in case of an illness.
Some of the most common reasons for Long Term Care Include aging, car accidents, diseases, illnesses and dementia symptoms. Nowadays with the cost of the health industry rising, the need for Long Term Care Insurance is very important because an accident can happen to anyone, in any place, at any time.
It is estimated that a single year in a retirement community can cost as much as $50,000 and cost for more luxurious nursing homes can reach up to $100,000 a year!! Rehabilitation centers are much more expensive because they need doctors available at all times and specialists that can treat certain patients with specific needs. Home care can also qualify for a type of Long Term Care since the patient will need some sort of person watching over him/her at all times and they would be spending money; not to mention they might need equipment to take home depending on the severity of the case.
Tax Qualified is one of the two types of Long Term Care Insurance and in fact it is the one that is most used today. This might be due to the fact that Non-Tax Qualified insurance gave money away too easily without asking for anything in return from the policyholder. It was more than likely because of that reason that insurance agencies started putting requirements in order to receive the Long Term Care Insurance reimbursement. Like all the other coverage in any other type of insurance, this system has some advantages and some disadvantages.
Some of the advantages that the Tax Qualified (or TQ plan) are that for tax purposes these kind of insurance is treated like accident insurance or health insurance. This means that Tax Qualified Long Term Care Insurance premiums are concerned to be a medical expense; hence the premiums are based on the policyholder's age and inflation. The younger the owner of the policy, the less he will be able to deduct from his taxes. Another good thing to note is that no benefits you receive from the Long Term Care Insurance can be taxed.
Some of the disadvantages about the Tax Qualified type of Long Term Care Insurance are that there are some requirements before the insurance company actually pays the policyholder any money. By being qualified this means that the policies are conformed to the 1996 Health Insurance Portability and Accountability Act (HIPA). Under this kind of Tax Qualified plan you are required that your Primary Care Physician (PCP) or one of the company's doctors certify that you are unable to perform two activities of daily living such as bathing, dressing, eating, transferring, etc for a period of at least 90 days. Also, the Doctor that checks to see the things mentioned above will have to give the patient a Plan of Care in order for the person to get any benefits. Keep in mind that you can also be eligible for benefits if you require substantial supervision to protect yourself due to a severe illness.
One of the most important things to understand is that a Tax Qualified policy as mentioned above is considered to be like a health insurance policy. This means that you would be able to itemize your deductions. To be more specific, if your total medical expenses exceed 7.5% of your adjusted gross annual income; you can write-off your deductions. Unfortunately, most policy holders do not exceed that 7.5 % that would allow them to take this deduction.
Now that you know some of the advantages and disadvantages of long term care insurance it will be much easier to contemplate whether to get it or not. Whatever your choice is, go out, shop around and see which policy is best for you. To compare long term care insurance quotes online from competing insurance companies then visit http://www.ltcquote360.com today!
По материалам: http://ezinearticles.com/
Опубликовано: 21 июня 2008
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