Long Term Care Benefit Plan
From Wikipedia, the free encyclopedia
A Long Term Care Benefit Plan is an option to sell a life insurance policy in return for 30 to 60 percent of the policy value toward long term health care.[1][2] A funeral benefit payment is made to the account beneficiary when the person receiving care dies.[3] If the benefit amount is spent while the person is still alive, they are still eligible for Medicaid.[4]
People have a legal right to sell their life insurance policies.[4] Life insurance policies are sold as Long Term Care Benefit Plans to pay for long term care, including assisted living and home care rather than a policy be surrendered or allowing it to lapse.[1][5]
A Long Term Care Benefit Plan is also known as an Assurance Benefit Plan.[2][6] A Benefit Plan is separate from a long term care insurance policy because it allows policy holders to use any form of life insurance policies to pay for long term care. The plan converts a death benefit into a living benefit.[2] Life insurance policies can be converted into a Long Term Care Benefit Plan for 30 to 60 percent of the policy amount to be used for long term care.[7] The sale of a life insurance policy can keep people off Medicaid.[8] By exchanging a life insurance policy for a Long Term Care Benefit Plan,[9] the benefits go toward long term care including assisted living, home health care, and nursing homes. The conversion takes away the responsibility of premium payments from the family[2] and there is no wait period before benefits begin.[9] The policy transfer is subject to regulatory standards in each state. Benefits are deposited into a FDIC-insured benefit account that follows federal and state banking regulations and is held by a nationally chartered bank and trust company. The benefit payments are then made directly to the health care facility on a monthly basis.[8]
If the insured person dies before the benefit period is over, the remaining benefit account is paid to the family or beneficiary as a final expense payment.[9][3] When the benefit is spent down, the person is still eligible for Medicaid.[5][4] All benefit accounts reserve either five percent of the death benefit or $5,000 (whichever is less) to provide a funeral benefit payment to the account's beneficiary.[3] These Benefit Plans can be funded through companies such as Life Care Funding[10] and The Lifeline.[11]