Long-Term Care Insurance Guide for Physicians 2025

Long-Term Care is much more than care for nursing homes, hospitals, and coverage needed because you could be confined to a wheelchair. It is a critical component of risk management and retirement planning. A long-term care event can post a great financial risk to our aging society. Without a plan, there could be serious financial impacts and the inability to keep future financial obligations. While naturally this can make people avoid the topic all together, it is worth talking about it now. We promote financial freedom at MD Disability Quotes in all stages of life.

Long-Term Care or “Extended Care” is assistance that a person needs because he or she has an impairment that requires help, and you will hear our team use this term through any planning or contract design process. This assistance is necessary for that impaired person to be able to safely get through the day. This “Plan” may involve Long-Term Care Insurance policies or other methods of life insurance hybrid products with an underwritten component to allow for a LTC rider.

To be able to afford safe care and to have financial freedom throughout the timeframe you may need such care. Keeping the family in the best emotional and financial state is of the utmost importance upon a death, disability or a medical event; regardless of the amount of time it takes to recover or receive care.

• Relying on Family Members
• Paying for Long-Term Care Out-of-Pocket (Self-Funding)
• Purchasing Individual Long-Term Care Insurance
• Purchasing Hybrid Life Insurance/Long-Term Care Insurance
• Government Programs like Medicare or Medicaid if at all

Most people hear about Long-Term Care planning and they immediately think of institutions like nursing homes, awful care and old people confined to wheelchairs. This follows the negative, emotional reactions to that often prevent us from thinking about doing anything at all about the fact that we age and will have health needs in the future. Whether you are in a state of pending legislation or are 

LTC Insurance is an insurance contract that provides benefits for one person, in an extended care event with professional care expenses. Long-Term Care Insurance is not recognized as mobility or ambulation, but by qualifying events after considering one’s inability to perform 2 of 6 Activities of Daily Living. Essentially, the plan will provide money via benefits if you are chronically ill, based upon triggers and the insurance contract design. Reminder, traditionally by definition that means that you cannot perform 2 of 6 ADLS or are cognitively impaired.

These provisions include consumer protections relating to non-cancellability, unintentional lapse, minimum standards, disclosure, reinstatement and nonforfeiture, among other things — and provide considerable peace of mind for clients and financial professionals alike. They also establish rules for marketing these products, as well as training and licensing requirements for those who sell them

Due to the recent legislation through multiple states, like what happened in Washington State, please note that the underwritten LTC rider may be allowable for the exemption required to bypass the potential state mandated plans. To learn more about this, please read here. Some states may decline this option.

There is typically underwriting and a medical underwriting process although rules could be different through an employer-paid plan. Many are streamlined and some will offer couples discount if available on the product chosen.

If eligible, you may qualify for an accelerated underwriting program for certain LTC plans. This means that just a tele-interview would be required; no other labs, medical records to be reviewed.

Most often, traditional underwriting may include a personal interview, blood, urine and the request of additional records or testing such as EKG.

Would you like to see if you qualify? Please schedule a consultation with amber, CLTC® here.

Each carrier has their specific provisions on what is required for the product. It is always best to prescreen your health history (or your partner or parents) with an insurance professional to learn more. As stated above, some carriers offer simple or express underwriting while some require additional testing, medical records and blood work as part of the review.

Common disqualifying health conditions are:

• Alzheimer’s disease, dementia or taking meds for memory loss
• ALS or Lou Gehrig’s disease
• Aneurysm
• Cancer history over a 10-year window
• Cardiomyopathy
• Chronic kidney failure
• Cirrhosis of the liver
• Congestive heart failure
• Coronary artery disease
• Diabetes with onset prior to age 25
• Dialysis treatment
• Down syndrome
• Higher BMIs
• HIV/AIDs
• Huntington’s Disease
• Implantable defibrillator
• Muscular dystrophy
• Organ transplant recipient
• Oxygen Use
• Undiagnosed Medical conditions, undergoing new treatments
• Untreated Sleep Apnea

An insured has an approval but due to health history concerns, the carrier approved at a higher premium.

There are alternatives for those who cannot qualify for the plans mentioned or do not want to purchase a plan.

1. Pay for a contract with a rating
2. Buy a Term Life Policy Accelerated Benefit Rider
3. Apply for a Home Equity Conversion Mortgage, a reverse mortgage (HECM)
4. Consider a Single-Premium Immediate Annuity (SPIA)

This is allowing for the funds to be used before death, to pay for expenses. Depending on the contract at hand, it is possible to advance forward benefits out of a policy if terminal. Subject to the state and product guidelines.

New regulations allow for some chronic illness riders to pay claims if the condition is temporary. However, most chronic illness riders still require the condition to be permanent.

Medicare is not designed to pay for Long-term care. It covers some LTC costs for the first 100 days.

Arizona – passed on this round of legislation, California – was the file December 2022, Colorado, Connecticut, Louisiana, Massachusetts, Michigan, Minnesota, New York, North Dakota, Oklahoma, Pennsylvania, South Dakota, Vermont, Virginia, Washington – in effect but has updated extensions/exemptions coming, West Virginia.

• The WA Cares Fund will provide a public long-term care (LTC) insurance benefit to eligible Washington state residents who are vested in the program.
• LTC benefits will be paid in $100 stackable units, with a $36,500 lifetime maximum: adjusted for inflation via what is otherwise known as Cost of Living Adjustment/COLA.
• Eligible beneficiaries can access benefits beginning in January 2025.
• The benefit will be funded by a 0.58% payroll tax.
• There is no cap on the amount of wages that may be taxed. Participation is mandatory for all W-2 employees in Washington; whereas other business entities may opt in. Please note: All mandated rules and guidelines are not completely clear as of now.

Last years, our team among many colleagues and clients witnessed WA State’s rollout of a very clunky effort to force people to save for Extended Care and Long-Term needs. They have rolled out their first round and are revising it as we speak. Currently, 2024 will have other exemptions and we expect more information to come.

The link article reports that employers should prepare to begin deducting premiums from the paychecks of their Washington workers who have not notified the employer that they are exempt, beginning on July 1, 2023. In addition, employers may want to make sure employees understand their responsibilities under WA Cares to notify the employer if they no longer qualify for a conditional exemption within the 90-day deadline.

Please be mindful when determining what you and your family may need for your own Extended Care plan while also being mindful of which states are considering legislation. Please see the heat map below to find the current states up for creating their own guidelines.

If you are in WA and want to know your rights to an exemption), please schedule time to discuss your personal situation. Current states considering their own.

Above, we mentioned that certain products may be eligible for the exemption from the forced state mandated LTC plans. Other carriers have 101g filed Chronic Illness riders on their life products. If you are looking for carriers with true 7702 riders as what was approved in WA State, I’d make sure to ask specifically how they filed when looking over plans.

Please talk with a broker who can shop all contracts and riders to be sure your Extended Care Plan is built for you and the state you live in.

From a regulatory standpoint, we know that certain carriers are lobbying in certain states to include 101g riders in their opt-out guidelines, if they decide to go that route. Our hope is other states include 101g as well. This is why we noted earlier that some policies are not considered LTC plans.* 

If you need both life insurance protection and a relatively affordable way to pay for potential long-term care costs, you could consider purchasing a life insurance policy and one of the two types of riders available: a long-term care rider (IRS section 7702B) or a chronic illness rider (IRS section 101g). However, we do not know which states are going to approve either currently as this is a moving target so check to see if your state is pending legislation when you begin your Extended Care Strategy.