Questions & Answers

What exactly does Colorado consider long-term care insurance?

Qualifying Long-Term Care Insurance Policies
Long-Term care insurance is allowed for any policy advertised, marketed, or offered as long-term care insurance that provides coverage for not less than 12 consecutive months for each covered person for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital. Long-term care insurance includes group and individual annuities and life insurance policies or riders that provide directly or that supplement long-term care insurance.

Long-term care insurance also includes a policy or rider that provides for payment of benefits based upon cognitive impairment or the loss of functional capacity. Long-term care insurance may be issued by:
  • Insurers;
  • Fraternal benefit societies;
  • Nonprofit hospital, medical-surgical, and health service corporations;
  • Prepaid health plans;
  • Health maintenance organizations;
  • Or any similar organizations to the extent they are otherwise authorized to issue life or health insurance.
Qualified long-term care insurance contracts The credit is allowed for qualified long-term care insurance contracts that meet all of the following conditions:
  • The only insurance protection provided under the contract is coverage of qualified long-term care services.
  • Generally, the contract does not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer, or the contract makes per diem or other periodic payments without regard to the expenses.
  • The contract is guaranteed renewable.
  • The contract does not provide for a cash surrender value or other money that can be paid, assigned, pledged as collateral for a loan, or borrowed.
  • The contract provides that refunds, other than cash refunds issued in the event of death of the insured or complete surrender or cancellation of the contract, and policyholder dividends or similar amounts under the contract must be used to reduce future premiums or increase future benefits.
  • The contract meets the consumer protection provisions established by federal law.
Insurance Policies That Do Not Qualify For The Credit
Several insurance policies that provide for long-term care or services similar to long-term care do not qualify for the credit. You cannot claim the credit for any life insurance policy for which all of the following conditions apply:
  1. The policy accelerates the death benefit specifically for one or more of the qualifying events of terminal illness, medical conditions requiring extraordinary medical intervention, or permanent institutional confinement and
  2. The policy provides the option of a lump-sum payment for those benefits and
  3. Neither the benefits nor the eligibility for the policy's benefits is conditioned upon the receipt of long-term care.
You also cannot claim the credit for any insurance policy which is offered primarily to provide any of the following:
  • Basic Medicare supplement coverage,
  • Basic hospital expense coverage,
  • Basic medical-surgical expense coverage,
  • Hospital confinement indemnity coverage,
  • Major medical expense coverage,
  • Disability income or related asset protection coverage,
  • Accident-only coverage,
  • Specified disease or specified accident coverage, or
  • Limited-benefit health coverage.

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