Skilled nursing care — Daily nursing and rehabilitative care that can be performed only by, or under the supervision of, skilled medical personnel. The care received must be based on a doctor's orders.

Intermediate care — Occasional nursing and rehabilitative care that must be based on a doctor's orders and can only be performed by, or under the supervision of, skilled medical personnel.

Custodial care — Primarily for the purpose of meeting personal needs such as walking, bathing, dressing, eating or taking medicine. It can usually be provided by someone without professional medical skills or training.

An individual must meet the new eligibility requirements for a tax-qualified long term care policy to qualify for benefits under that policy. A licensed health care practitioner must certify that an individual is "chronically ill" and prescribe a plan of care. An individual is considered chronically ill if care is expected to be needed for at least 90 days or requires substantial supervision due to severe cognitive impairment.

Long term care policies issued before January 1, 1997 are automatically considered tax-qualified. Any policy issued or modified after January 1, 1997 must meet the federal requirements to be considered tax-qualified.

You are encouraged to consult a tax advisor on how these changes could affect you.

Medicare generally pays 100% of skilled nursing facility care for the first 20 days and 80% for the next 80 days, but it will not pay for skilled nursing facility care after the first 100 days. This benefit is only provided if you are admitted to a Medicare certified facility within 30 days after a minimum three-day hospital stay. A physician must certify that your admission is medically necessary. Medicare may also pay for part-time skilled home health care if you are homebound and a physician certifies the care is medically necessary. Medicare supplement or "medigap" policies generally only cover the enrollees portion of a Medicare covered benefit and generally do not cover long-term care expenses beyond the 100 day Medicare benefit.

Medicaid will pay your nursing home or home care expenses only if your income is less than a set amount and requires, if you are single, that you spend virtually all of your savings and other assets before providing coverage. If you are married, your spouse will be able to keep sufficient assets to provide for her or himself.

Long-term care (LTC) insurance is coverage you can purchase privately from insurance companies to cover the long term care nursing expenses government programs do not cover. For most this is the most cost-effective solution.

Age - In general, the younger you are when you buy a policy, the lower the premium will be. Most companies will not sell policies to individuals over 79 years of age.

Elimination or deductible periods - These periods are the number of days you must stay in a facility, or the number of home care visits you must have received, before policy benefits begin. Usually, the longer the elimination or deductible period, the lower the premium.

Amount paid and duration of benefits - In general, the more money the policy will pay or the longer the benefit period, the more you will pay for the policy. For example, a policy that pays you $100 a day for up to five years of nursing home care will cost more than a policy that pays $50 a day for three years.

Optional Inflation Riders - Many insurers offer optional inflation riders for an additional premium. These riders usually increase the daily benefit each year by a specified amount of at least 5%. Tax qualified policies are required to offer inflation riders as an option to insureds.

Optional Return of Premium and Nonforfeiture Benefits - Some insurers offer nonforfeiture benefit or return of premium riders for an additional premium. Tax qualified policies are required to offer nonferfeiture benefits as an option to insureds. When the insured dies or stops paying premiums, a Return of Premium benefit returns a pre-defined portion of the total premiums paid for the policy. If an insured stops paying premiums, a nonforfeiture rider provides paid long-term care coverage equal to at least 30 times the daily benefit. These benefits are generally not available until the insured has been covered by the policy for three or four years.