Thursday, November 20, 2014

Long-Term Care Insurance Alternatives for Baby Boomers

To get coverage for long term care, there are other ways aside from looking for a major insurance carrier and paying the premiums of a long term care insurance policy. You probably find premiums to be too expensive due to limited assets. On the other hand, if you already own a health or life insurance policy, you may not want to buy another one for long term care. discussed and provided several options as an alternative to traditional long-term care insurance.

If you are thinking twice about the traditional method of getting coverage for long term care, here are three addition alternatives that might work for you:  

1. Long Term Care Benefits for Veterans

As a veteran of the US military, you can receive benefits for long term care from the United States Department of Veteran Affairs. Under the VA's long term care services, you can qualify for either home-based care or facility-based care.

You can be eligible for the VA's home-based care services. These involve medical supervision from nurses and various forms of recuperative treatment that are administered by therapists. You can only get home-based care services if your health condition proves their necessity. You also have to consider that forms of home-based care vary among immediate localities and states.        
Through VA benefits, you receive care services within a nursing facility, assisted living facility, or any residential setting for long term care. Accommodation in a nursing facility is crucial if you go through a severe or chronic illness. In fact, you can stay in a nursing facility and receive indefinite coverage if you need skilled care for a medical condition you received while in active service duty.

Have a Disability from Service Duty? Have No Worry     
VA assigns ratings for service-connected disabilities to determine how much care enrolled veterans need. For example, you also qualify for care within a nursing facility if your rating is 60% and you are currently unemployed. You also have disability compensation that is given every month as well as tax exemptions.
To apply for disability coverage under the VA, you must first fill up the VA Form 21-256. Once finished, send that form to the nearest Veterans Benefits Administration (VBA) office. Other alternatives for signing up are applying online through eBenefits and coordinating with a Veterans Service Officer.

Assisting the Veterans of the Home of the Brave 
VA gives you Aid and Assistance privileges if you already need support with essential activities like dressing and relieving yourself. Additional reasons for eligibility include the state of being bedridden and difficulties with eyesight.
Your spouse and other beneficiaries also get financial help from the Aid and Assistance program. As an example, your spouse receives around $1,100 per month. Meanwhile, one of your children or any other dependent gets an estimated monthly sum of $2,000.        
Eligibility for Aid and Assistance requires an honorable discharge. You also need an active service record that spans 90 days - with the minimum of 1 day service during a period of war. To apply for Aid and Allowance benefits, you have to forward a written article to the closest VBA office from your home. Make it complete through a doctor's approval for requiring assistance with daily activities.        

2. 1035 Exchange

Perhaps you've thought twice about getting insured for long term care because you already have a life insurance policy or an annuity. Adding a long term care insurance policy also means extra premiums, and puts you in a difficult financial situation. The good thing is that you can take advantage of the Internal Revenue Code's Section 1035.    

Before You Go with the 1035 Exchange, Consider These
Before you learn the process of 1035 exchange, it is better if you get to know the conditions for fulfilling this kind of transaction first. To start with, you have to make a final decision regarding your transaction after a briefing about 1035 exchange - which usually includes pros and cons.
As an advice, pay attention to your health. Keep in mind that changes in your health can result in extra premiums under the acquired long term care policy. Even worse, your coverage might be withheld.
You should also consider the possibility of increased premium rates with the long term care policy that you get in a 1035 exchange. This is because you aged since you acquired your initial life insurance policy or annuity. Revisions of the extra benefits of both older and newer policies are also possible. Furthermore, take a closer look on surrender charges and credit interest involved in your 1035 exchange.    
From Life to Long Term Care: How is it Accomplished?
Your initial life insurance policy or annuity undergoes a full evaluation of its current benefits and coverage. Evaluation results might suggest that a 1035 exchange does not work for your situation. Otherwise, your transaction continues on.  
It is advisable to transfer all of your revenues from the older policy into your target long term care insurance policy. Given the right circumstances, your older policy's gain is exempted from income taxation. If the initial contract lacks gain, you can still make the most out of other tax advantages that are present in a 1035 exchange. After all, this transaction is still better than relinquishing your life insurance policy and then buying a long term care insurance policy.
Another advantage with the 1035 exchange is that it enables you to maintain your initial policy's higher premium basis while you own the newer policy. Usually, you can retain the privilege of withdrawing without the tax that is found in your previous contract.    

Extra Reminders along the Way   
Just remember that the transfer of the resulting long term care insurance policy's ownership to another person is prohibited while the 1035 exchange process is ongoing. Otherwise, you face income taxation. You can simply turn over the contract's ownership before you begin the transaction.
Another rule to keep in mind: you cannot perform a 1035 exchange from a life insurance policy or an annuity to multiple policies.

3. Hybrid Long Term Care Insurance

You can actually get coverage for long term care services using your life insurance policy. Although it sounds impossible, this is a growing trend among Americans today. Americans currently face a major setback with getting insured for long term care. A number of credible insurance carriers today no longer sell long term care insurance policies though they used to. Still, buying insurance is a more viable option than using up savings and assets for paying care services.

A breakthrough in this dilemma comes in the form of life insurance that is linked with long term care benefits. People often refer to this approach as hybrid long term care insurance. There is also a hybrid annuity with long term care coverage. But first, take a look on long term care benefits that are linked with life insurance policies.

You Pay More but You Can Get Your Money Back 
A hybrid life and long term care insurance policy might require you to pay your premiums in one big swoop. Premiums can cost as much as $100,000. The usual long term care insurance policy seems more affordable because you pay smaller premiums on a routine basis.
In spite of this, the best feature of the hybrid insurance policy is you can get your money back in case you do not necessitate care services. Your hybrid policy then gives life insurance payments that come with tax advantages. A traditional long term care insurance policy, on the other hand, cannot guarantee premium reimbursement.
There is an additional perk with a hybrid long term care insurance policy. Suppose that you place $75,000 on it. Should you choose to surrender your policy, you still go home with $75,000. Once you pay hybrid long term care insurance policy premiums, they are already settled and their rates do not rise.           

Annuity with Long Term Care Brings Useful Advantages
As stated earlier, some annuities include long term care benefits and serve as the alternative form of coverage for care services.
Like a life insurance policy with long term care benefits, you can retrieve the money you invested in a hybrid annuity if long term care becomes unnecessary.  You are also free from the monthly deadlines and rate hikes with premiums. You can add inflation protection to your hybrid annuity. Furthermore, it is easier to become eligible with the hybrid annuity than with the usual long term care insurance policy.   
Remember that a percentage of your introductory annuity premium determines how much payment for long term care coverage you receive. Your annuity then collects money to pay for future care expenses. When the time to get long term care comes, you sustain care services through the collected funds in your annuity value. Monthly payments can be based on your selected duration of coverage.                

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