The benefit trigger for a tax-qualified ltci plan requires how many days

Policies pay for qualified long term care cost based on the contract.  The basis can be cost-Incurred Benefit/Reimbursement Plan or Indemnity Benefit or Cash Benefit

A cost incurred benefit reimburses actual expenses up to the stated daily or monthly benefit amount.

An indemnity benefit pays the insured a stated daily benefit each day an approved long term care service is received. 

A cash plan pays the monthly benefit at the beginning of the month or end of month based on contractural language in which the insured qualifies for benefits.

Access to Policy Benefits (Benefit Triggers)

Tax Qualified Policies require certification by your licensed health care practitioner that you are chronically ill, meaning that substantial (either hands-on or stand-by) care is needed and is expected to last for at least 90 days.  There are two ways to qualify for benefits:

Activities of Daily Living (ADL) — you require help with at least 2 activities of daily living, such as eating, bathing, dressing, transferring, toileting or continence.

Cognitive Impairment—you are certified by your licensed health care practitioner as needing assistance to protect yourself from threats of health or safety.  You may be able to physically perform the activities of daily living but need to be reminded to do so.

Question:

When does a long-term-care insurance policy start to pay out? What are the benefit triggers, and how long do I have to wait before the benefits kick in?

Answer:

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Most long-term-care insurance policies require two kinds of benefit triggers before they’ll pay – either you need help with two out of six activities of living (which generally include bathing, dressing, toileting, eating, transferring and continence) or you have severe cognitive impairment. Your doctor usually needs to fill out a form with the details, and the insurer may ask for additional medical records or may require a cognitive screening to verify impairment, says Mike Ashley, owner of Senior Benefits Consultants, in Prairie Village, Kan.

Most long-term-care policies then have a 60- or 90-day waiting period before benefits kick in, or another time period you chose when you bought the policy (called the “elimination period”). In most cases, the same waiting period applies to any type of care you receive, whether it’s in your home, an assisted-living facility or a nursing home. However, some policies, such as many Genworth policies, have a zero-day waiting period for home care but a 60- or 90-day waiting period for all other types of care.

How the waiting period is calculated can vary and is an important feature to consider when choosing a policy. If your policy has a “calendar day” elimination period, you count each day after the benefit trigger is met. In that case, a policy with a 90-day waiting period could start to pay out within about three months after you meet the trigger criteria. But a policy with a “service day” waiting period counts only the days you receive care. If you need care three days a week, it could take more than seven months to reach the 90-day waiting period.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.

In the preceding chapter we learned why personal savings and assets, Medicare, and Medicaid are for most people not good ways to fund long-term care.� But there is another approach to funding these expenses: long-term care insurance. A person can buy an LTCI policy, pay premiums of a set amount, and when she needs care, she will receive benefits to help cover the cost.

All LTCI policies work in essentially the same way and have many of the same provisions. But there is also a great deal of variation, resulting from different product designs and optional features. We�ll start with product design (the basic package of benefits offered by insurers) and then we will examine purchaser options -- the choices a consumer makes to tailor a particular LTCI product to meet his needs.

Long-Term Care Policy Design

When designing LTC insurance product, an insurer must ask� a number of basic questions:�

� Will� the policy be federally tax-qualified?

� Does the policy qualify for a state long-term care partnership program?

� What conditions must be met for benefits to be paid?

� What long-term care settings and services will the policy cover?

� On what basis are benefits paid?

� What rights will the policyholder have regarding renewal of the policy and premium increases?

The answers to these questions directly affect the level of coverage the insured can rely on, and the cost of the premiums for that coverage.

Tax-Qualification of LTC Policies

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) established a class of LTCI policies: federally tax qualified (TQ) policies. To be tax-qualified, a policy must meet certain requirements, and owners of TQ policies enjoy certain tax advantages.Around 90 percent of all LTC policies in force today are tax-qualified -- the rest are referred to as nonqualified (NQ) policies.� Specific requirements for TQ policies and the tax treatment of LTC policies is discussed later in this chapter.

It is important to note that all LTC Partnership programs (discussed later in this course) must be tax-qualified.� But being a tax-qualified plan does not automatically make the policy a Partnership plan.�� Partnership plans must be tax qualified and meet certain other requirements.� Those additional requirements are explored in later chapters.

Benefit Triggers��

To receive benefits under an LTCI policy, the insured must meet at least one of certain conditions stipulated in the policy, known as benefit triggers. ��For an LTCI policy to be deemed �tax-qualified� under HIPAA, the policy must meet certain requirements in relation to benefit triggers:

� Standardized Activities of Daily Living (ADLs). HIPAA establishes six standard ADLs (bathing, dressing, toileting, transferring, continence, and eating) and defines them in detail. Tax-qualified policies must include at least five of these six and must use the HIPAA definitions. Also, they must define a physical impairment as the inability to perform at least two of the standard ADLs without substantial assistance from another person.

� Substantial assistance. A TQ policy may define substantial assistance in two ways. Hands-on assistance is the physical assistance of another person without which the impaired individual would be unable to perform the ADL. Stand-by assistance is the presence of another person within arm's reach of the impaired individual that is necessary to prevent, by physical intervention, injury to the individual while she is performing the ADL. For example, if a person cannot wash herself and must be washed by another, she needs hands-on assistance with the ADL of bathing. If, on the other hand, she can take a bath without any help but needs someone there in case she falls getting into or out of the bathtub, she needs only stand-by assistance. A TQ policy may require an insured to need hands-on assistance, or it may require only a need for stand-by assistance, or it may accept either standard, or it may use a more rigorous standard, but it may not use a standard less rigorous than stand-by assistance.

� The 90-day certification requirement. A licensed healthcare practitioner must certify that the insured's inability to perform ADLs is expected to last at least 90 days. This provision is required because LTCI benefits are not intended for those unable to bathe themselves or dress for a short time while they are recovering from an illness or injury. (Medicare or medical expense insurance generally covers the care of those with temporary conditions.) This 90-day requirement does not apply to cognitive impairment; as such impairments are not usually temporary.

� Severe cognitive impairment. To qualify for benefits on a cognitive basis, the insured must suffer a severe cognitive impairment such that substantial supervision is needed to protect her from threats to her health and safety. A TQ policy cannot pay benefits for mild disorders such as the increased forgetfulness that often accompanies aging. HIPAA defines a severe cognitive impairment as a loss of or deterioration in intellectual capacity -- including Alzheimer's disease or irreversible dementia.

Variation in Benefit Triggers

To a great extent, benefit triggers have become standardized, as tax-qualified policies must adhere to the HIPAA requirements described above.  In the past "medical necessity" was a trigger in many LTCI policies. In the context of long-term care insurance, medical necessity means that a physician determines that a person has a need for long-term care.� Medical necessity may not be a benefit trigger in a TQ policy, nor may �prior hospitalization�, another benefit trigger found in some older policies.

But the few policies that are nonqualified may base benefit eligibility on other criteria (such as medical necessity). And even among tax qualified policies, there is room for some variation: Although most TQ policies include all six standard ADLs, a few include only five. Some TQ policies require the inability to perform only two ADLs, while others require three (requiring more is permitted but rare). Finally, under some TQ policies the insured must need hands-on assistance to qualify for benefits, while under others the less rigorous standard of stand-by assistance is used.� Seemingly minor changes in a policy�s benefit trigger can have a large impact on the insured�s level of coverage.

In most policies the benefit triggers for home care coverage are the same as for nursing home coverage, but a few policies use different triggers for each.

Please note: in most policies, after an insured has met a benefit trigger, she must also satisfy an elimination period before she can receive benefits. Elimination periods are examined in the following section.

How long is the grace period for most LTCI?

What is a benefit trigger?

How long must the free look period be for long term care insurance policies sold in California?

How many consecutive months of coverage must LTC insurance provide in Florida?