LONG TERM CARE INSURANCE

Why should I apply for Long Term Care insurance?
Eventually, the majority of us reach a point in our lives where we are no longer able to take care of ourselves. Whether the cause is from an accident, onset of an illness such as Parkinson’s disease or stroke, more than likely there will be a time where we will need extended long term care. Americans over the age of 65 face a 75% risk of entering a nursing home for Long Term Care services. A year in a nursing home averages more than $70,000 and can exceed $100,000 annually in some parts of the country.

Premiums for Long Term Care insurance rise with age. Also, your health plays a factor in your premium. If you wait to long before applying for Long Term Care insurance your age and health may make it very expensive or even impossible to qualify for a policy.

What is the average daily benefit?
This is the rate determined by your policy provider which will cover your daily benefits. On average they range from $150 to $500 daily depending on your location. View Your State’s Average Daily Benefit.

What is the average Assisted Living Facility cost yearly?
Assisted living facilities can cost upwards of $100,000 a year with rates expected to continue to rise as the baby-boomer population reaches retirement age.

What are ADLs?
The basic activities and functions performed on a daily basis that are usually done without assistance. The six ADLs are:

  • Eating
  • Dressing
  • Bathing
  • Toileting
  • Transferring
  • Continence

Are long term care insurance expenses deductible?
According to the tax code, for people who itemize tax deductions, medical expenses are deductible if they exceed 7.5% of adjusted gross income (AGI). For an individual, the portion of the LTC insurance premium that is deductible is determined by the age of the insured. However, if you are purchasing this for a parent and you are not considered a dependent, you are not entitled to a medical expense deduction. Additionally, contact your tax advisor regarding other deductions if you are a Corporation.

How are benefits from the policy treated by the IRS?
For individuals, these benefits are generally not taxable, as long as the policy you own is a Tax Qualified policy. Almost all policies are “TQ” policies.

Why choose Long Term Care insurance over Medicaid?
Many planners refer to Long Term Care insurance as “asset protection”. Medicaid eventually pays for Long Term Care services once an individual becomes impoverished. If you are able to pay Long Term Care insurance premiums without having to change your lifestyle, you should transfer that risk to the insurance company.