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Maine.gov > PFR Home > Insurance Regulation > FAQ > Long Term Care

Frequently Asked Questions - Long Term Care

I understand that for some long-term care policies the insured person may deduct premiums on the Maine income tax return. For what policies is this deduction available?

This is a somewhat complicated answer, and you should consult with a tax or financial advisor. There are three kinds of long-term care policies for which the deduction is allowed. First, any policy stating it is intended as "qualified" under the Internal Revenue Code for a deduction on the insured's federal income tax return automatically permits the insured to claim a deduction as well on their Maine return. This automatic qualification occurs irrespective of the date when the federally qualified policy was first issued. The result is that a policy qualified for federal income tax purposes is qualified for a Maine income tax deduction.

Second, any policy issued in Maine during 1991 through 1999 that has been "certified" in writing by the Maine Superintendent of Insurance as eligible for state income tax incentives allows a premium deduction on the state return. Maine Revenue Services maintains a list of these certified policies. The list can be found on and reproduced from the Bureau's website.

Third, any policy delivered in Maine beginning in 2000 that is not federally tax qualified (i.e., premiums cannot be deducted on the federal tax return) nonetheless may be entitled to a deduction on the Maine tax return when two conditions have been met. The policy form has to be approved by the Bureau for marketing in Maine and the insurer has to request from the Superintendent a letter certifying the policy as entitled to state income tax incentives. For more information on this procedure, see 24-A M.R.S.A. §5075-A.

What is an elimination period?

For long-term care insurance, it is the number of days that you pay out-of-pocket before the insurance company begins to pay benefits.

What is the Maine Long-Term Care Partnership Program?

Before July 1, 2009, insurers offered only traditional long-term care insurance policies. Now insurers can sell partnership policies as well. A list of Bureau approved partnership policies is posted here. If you have a long-term care partnership plan, you may be able to keep assets of a greater value than normally allowed for enrollment in MaineCare (Medicaid).  MaineCare cannot recover this higher asset value from your estate.
For you to be accepted by MaineCare, you also must meet income eligibility limits. The Partnership Program does not affect income eligibility.

What makes a traditional long-term care policy eligible to be exchanged for a partnership policy?

There are three conditions for the exchange:

  • First, the policy must be federally qualified for income tax incentives. You will find whether the policy is tax qualified on the front page.
  • Second, the policy may need inflation protection depending on your age when you buy the policy. Inflation protection annually increases your covered benefits.  The amount of the annual increase depends on the insured’s age when coverage begins—through age 60, at least 3% compound interest; ages 61 through 75, no less than 3% simple interest; age 76 and older, no inflation protection is required.
  • Third, the traditional long-term care policy must have specific consumer protections when issued, or anytime it is modified.

How and when may I make the exchange?

For eligible traditional long-term care policies issued on or after July 1, 2004, your insurance company must give you a document by September 28, 2012, stating the policy is intended to be a partnership policy. It is important for you to keep this document, as it becomes a part of the policy. It will serve as proof to the Maine Department of Health and Human Services (which administers MaineCare) that the policy is intended to qualify under the Partnership Program.

For traditional long-term care policies purchased before July 1, 2004, you must ask your insurance company, preferably in writing, by September 28, 2012, if your policy is eligible for exchange. If it is eligible, the insurer must provide you with the document described in the preceding paragraph. If the insurer states the policy is not eligible, it must inform you, in writing, of its reasons. 22 M.R.S.A. § 3174-GG; 24-A M.R.S.A. §§ 5071-5082; Maine Bureau of Insurance Rule 425; Maine Bureau of Insurance Bulletin 368.

 

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Last Updated: January 28, 2013