From the tax adviser: buying long-term-care insurance: a security blanket for old age.Long-term-care (LTC LTC abbr. lieutenant colonel ) planning focuses on meeting the financial, medical, housing and personal needs of individuals who can no longer function independently. Planning must address the level of care needed, where it best can be provided and how it will be financed. CPAs can assist clients in making decisions about purchasing LTC insurance to meet the costs. TYPES OF CARE Individuals unable to function independently may receive the following care: * Acute care. The person's medical needs warrant hospital admission. * Intermediate and skilled care (generally, nursing home care). If the patient will pay privately, the doctor and family determine whether the facility is appropriate. For Medicaid Medicaid, national health insurance program in the United States for low-income persons; established in 1965 with passage of the Social Security Amendments and now run by the Centers for Medicare and Medicaid Services. to pay, the individual must meet the state program's "medically necessary medically necessary Managed care adjective Referring to a covered service or treatment that is absolutely necessary to protect and enhance the health status of a Pt, and could adversely affect the Pt's condition if omitted, in accordance with accepted " criterion. * Residential care or assisted living as·sist·ed living n. A living arrangement in which people with special needs, especially older people with disabilities, reside in a facility that provides help with everyday tasks such as bathing, dressing, and taking medication. . Generally, persons who require such care do not meet the criteria for a nursing facility's skilled or intermediate care. These facilities cost less than nursing homes. Some states provide payment assistance. * Home care. This is generally limited to those who can operate with some degree of independence and have a family support system that allows them to remain at home; the costs of such care can be offset by payment assistance from Medicare or Medicaid. PAYING LTC COSTS LTC costs are paid privately; by Medicaid, Medicare or Medigap; or by LTC insurance. Some limited services initially may be covered by Medicare or the Veterans' Administration, but these are not long-term funding sources. * Private pay. Currently, nursing homes charge approximately $3,000 to $6,000 per month. Maintaining a person at home with full-time care costs even more. * Medicaid, Medicare and Medigap. Usually, Medicare and Medigap policies cover some of the first 100 days of nursing home care. These sources are not a long-term payment solution. * LTC insurance. As with life insurance, the policyholder Policyholder An individual who owns an insurance policy. pays monthly premiums to the insurance company; if LTC is needed, the company pays the bill, as dictated dic·tate v. dic·tat·ed, dic·tat·ing, dic·tates v.tr. 1. To say or read aloud to be recorded or written by another: dictate a letter. 2. a. by the policy provisions. Individuals must be in reasonably good health to qualify for policies and premiums can be high. The insurance company may restrict the facilities from which individuals can choose; the services received may be limited. An LTC policy should cover the costs of * At-home help with daily activities, such as bathing and dressing. * Community programs, such as adult day care. * Assisted living services (for example, meals, health monitoring and help with daily activities) provided in a special residential setting other than a home. * Nursing home care. CONCLUSION CPAs should help their clients understand the issues involved in the purchase of LTC insurance. For more information, see the Personal Financial Planning Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against column, written by Jay H. Kaplan, Pamela W. Kaplan and George A. Lewis, in the January 2005 issue of The Tax Adviser. Notice to readers: Members of the AICPA AICPA See American Institute of Certified Public Accountants (AICPA). tax section may subscribe to Verb 1. subscribe to - receive or obtain regularly; "We take the Times every day" subscribe, take buy, purchase - obtain by purchase; acquire by means of a financial transaction; "The family purchased a new car"; "The conglomerate acquired a new company"; The Tax Adviser at a reduced price. Contact Judy Smith at 202-434-9270 for a subscription to the magazine or to become a member of the tax section. |
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