long-term care (ltc) insurance, according to washington state law (leg.wa.gov), is an insurance policy, contract, or rider that provides coverage for at least 12 consecutive months to an insured person if they experience a debilitating prolonged illness or disability. ltc insurance generally covers the following types of services if they are provided in a setting other than a hospital intensive care unit:
- personal care
- go to the bathroom
- transfer (such as getting up from a chair or bed)
- control your bladder or bowels (continence)
ltc insurance generally pays benefits when an insured person can no longer independently perform two or more of the following activities of daily living (adls):
ltc insurance may be included as a rider on some life insurance and annuity policies. however, some life insurance policy riders do not qualify as long-term care insurance in our state under the definition of ltc insurance as defined in rcw 48.83.020 (leg.wa.gov). See a list of companies approved to sell long-term care insurance in Washington state.
If you have questions about benefits or exemptions regarding the new wacares fund (created as part of the long-term services and supports trust law), visit the wacares fund website (wacaresfund.wa. gov).
what clauses qualify as long-term care insurance?
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The Office of the Insurance Commissioner (OIC) considers long-term care riders to be a form of LTC insurance if they meet clearly defined benefit requirements.
To qualify as an LTC in Washington State, a long-term care rider attached to a life insurance or annuity policy must pay a dedicated benefit to cover long-term care services. A clause that specifies that your benefits pay for long-term care services, rather than a lump sum or payments to be used at the discretion of the insured, may be considered limited liability insurance. As such, it will be subject to most of the same requirements that the ICO applies to limited liability insurance.
ltc insurance also includes “qualified” long-term care insurance riders for life insurance policies. these are also called federal tax-qualified long-term care insurance riders and meet the requirements of sections 7702b (b) and (e) of the Internal Revenue Code of 1986, as amended.
what clauses do not qualify as long-term care insurance?
A type of rider found in some life insurance policies called an accelerated death benefit does not qualify as limited liability insurance. An accelerated death benefit is when a life insurance policy’s death benefit is phased out and converted to cash payments following a diagnosis of a terminal illness. For an accelerated death benefit to qualify as LTC insurance, the rider must meet all long-term care standards and will refer to the long-term care services in the name of the rider. one example is a “death benefit acceleration for qualified long-term care services.”
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another common type of rider known as a critical illness rider does not meet the statutory definition of limited liability insurance in washington state. Like an accelerated death benefit, a critical illness rider in a life insurance policy or annuity converts the value of a policy or contract into cash payments if an insured has been diagnosed with a chronic illness.
These two types of riders are known as “accelerated benefits,” as defined by wac 284-23-620 (leg.wa.gov). Unlike LTC insurance, which requires the insured to no longer be able to take two or more ADLs, accelerated benefits can be activated after a single qualifying event. ICO-determined accelerated benefits riders and critical illness riders do not qualify as limited liability insurance products. This is primarily because its benefits are paid to policyholders without the funds being required to be used for long-term care services. under washington state law, accelerated benefits may not be sold or advertised as ltc insurance.
Still not sure if your policy or contract qualifies as limited liability insurance?
Contact your insurance company to find out if the product you purchased or wish to purchase complies with the Washington Insurance Code (title 48) (leg.wa.gov), the Washington Administrative Code (title 284) (leg .wa .gov) and is an ICO or Interstate Insurance Products Regulatory Commission (iiprc) approved company.
The riders filed with the IIPRC under the “Accelerated Individual Standards for Death Benefits” (ACCDB) standards are not long-term care insurance products.
The riders filed with the iiprc under the “uniform standards of individual long-term care (iltc) are long-term care insurance products.”