There are two types of Long Term Care plans:

• Non-Tax Qualified
• Tax Qualified

There are limited rules for non-tax qualified plans and insurance companies are not consistent with each other. The rules of tax qualified policies are spelled out by the Internal Revenue Code and administrated by the IRS. The method of qualifying for benefits with a tax qualified policy is as follows.

The Long Term Care insured must:

• Require substantial supervision to protect himself/herself from threats to health and safety due to severe cognitive impairment; and/or
• Be unable to perform without substantial assistance from another individual at least two out of six of the activities of daily living (ADLs) for a period of at least 90 days. The six activities of daily living are: bathing, continence, dressing, eating, toileting and transferring (moving oneself from one place to another). A plan of care prescribed by a licensed health care practitioner is required to qualify for benefits.

These two requirements are often referred to as the benefit triggers.

Final Step for Long Term Care insurance

Before collecting any policy benefits an insured must also fulfill the Elimination Period (waiting period). The Elimination Period works like a deductible. Elimination Periods vary in length, but 60 to 100-day periods are most common. During the Elimination Period, the insured is liable for all costs related to their Long Term Care services.

Once the insured has met the requirements for a benefit eligibility and fulfilled the Elimination Period, the policy will continue to pay (up to the maximum daily benefit) until the insured no longer needs Long Term Care, or until the insured has exhausted his/her benefits.