Long-Term Care Insurance
[/fusion_text][fusion_separator style_type=”default” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” sep_color=”” top_margin=”5%” bottom_margin=”” border_size=”0″ icon=”” icon_circle=”” icon_circle_color=”” width=”” alignment=”center” /][/fusion_builder_column][fusion_builder_column type=”1_3″ layout=”1_3″ spacing=”” center_content=”no” link=”” target=”_self” min_height=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” background_color=”” background_image=”” background_image_id=”” background_position=”left top” background_repeat=”no-repeat” hover_type=”none” border_size=”0″ border_color=”” border_style=”solid” border_position=”all” border_radius=”” box_shadow=”no” dimension_box_shadow=”” box_shadow_blur=”0″ box_shadow_spread=”0″ box_shadow_color=”” box_shadow_style=”” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” margin_top=”” margin_bottom=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” last=”no”][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container hundred_percent=”no” hundred_percent_height=”no” hundred_percent_height_scroll=”no” hundred_percent_height_center_content=”yes” equal_height_columns=”no” menu_anchor=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” status=”published” publish_date=”” class=”” id=”” background_color=”” background_image=”” background_position=”center center” background_repeat=”no-repeat” fade=”no” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ video_mp4=”” video_webm=”” video_ogv=”” video_url=”” video_aspect_ratio=”16:9″ video_loop=”yes” video_mute=”yes” video_preview_image=”” border_size=”” border_color=”” border_style=”solid” margin_top=”” margin_bottom=”” padding_top=”5%” padding_right=”” padding_bottom=”3%” padding_left=””][fusion_builder_row][fusion_builder_column type=”2_3″ layout=”2_3″ spacing=”” center_content=”no” link=”” target=”_self” min_height=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” background_color=”” background_image=”” background_image_id=”” background_position=”left top” background_repeat=”no-repeat” hover_type=”none” border_size=”0″ border_color=”” border_style=”solid” border_position=”all” border_radius=”” box_shadow=”no” dimension_box_shadow=”” box_shadow_blur=”0″ box_shadow_spread=”0″ box_shadow_color=”” box_shadow_style=”” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” margin_top=”” margin_bottom=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” last=”no”][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=””]It’s not easy to think about, but chances are you will need some help taking care of yourself later in life. How are you going to pay for it? Will you take the chance that you will deplete your retirement savings?
About half of 65-year-olds today will eventually develop a disability and require some long-term care services, according to a study revised in 2016 by the Urban Institute and the U.S. Department of Health & Human Services. Most will need services for less than two years, but about 14% will require care for more than five years. If you pay out of pocket, you’ll spend $140,000 on average. Most people haven’t prepared for that risk.
Medicare doesn’t cover long-term care (also called custodial care), if that’s the only care you need. Most nursing home care and home care is custodial care, which includes supervision and help with day-to-day tasks, such as; bathing, dressing, or getting in and out of bed or a chair. Again, Medicare doesn’t cover custodial care, only skilled nursing or rehab after a hospital stay.
Long-term care is not covered by regular health insurance either. You can get help through Medicaid, the federal and state health insurance program for those with low incomes, but only after you have spent down your savings leaving you with only $2,000. Income limits apply as well.
Buying long-term care insurance is one way to prepare. A long-term care insurance policy helps cover the costs of that care when you have a chronic medical condition, a disability or a disorder such as Alzheimer’s disease. Most policies will pay for care given in a variety of places, such as; in your home, a nursing home, an assisted living facility, or an adult day care center.
The Two Reasons People Buy Long-Term Care Insurance
- To Protect Savings
Long-term care costs can deplete a retirement nest egg quickly. The median cost of care in a semi-private nursing home room is $89,297 a year, according to Genworth’s 2018 Cost of Care Survey.
ANNUAL MEDIAN COSTS OF LONG-TERM CARE IN 2018
- To give you more choices for care
The more money you can spend, the better the quality of care you can get. If you have to rely on Medicaid, your choices will be limited to the nursing homes that accept Medicaid patients. Medicaid also doesn’t pay for assisted living in many states.
What You’re Buying and Example of Cost
When you buy long-term care insurance, you’re buying an amount per day of care for a chosen number of years, or for lifetime benefits, payable after a waiting period of a chosen number or months called an “elimination period” (think deductible before care begins). We want to help you understand the costs in your area to determine the amount you would want to purchase per day of care. Then you end up having a “pool of benefits”, which is the amount per day times the number of days you purchased. So, if you purchased $200 per day for a 2-year benefit, that’s $200 x 730 days = a $146,000 pool of benefits. This is the amount you have to draw on for home care, nursing home care, assisted living, or adult day care. Once this pool is exhausted you must draw on your savings. We also want that amount per day purchased to keep up with inflation so when you need care that amount is relevant. So, we purchase inflation protection. Your per day benefit will increase with inflation, and so does your pool of benefits.
You’ll pay more for richer coverage, such as higher limits on the daily and lifetime benefits, cost-of-living adjustments to protect against inflation, shorter elimination periods, and fewer restrictions on the types of care covered.
A single 55-year-old man in good health buying new coverage can expect to pay an average of $2,050 a year for a long-term care policy with an initial pool of benefits of $164,000, according to a 2019 price index from the American Association for Long-Term Care Insurance. Those benefits compound annually at 3% to total $386,500 at age 85. For the same policy, a single 55-year-old woman can expect to pay an average of $2,700 a year. The average combined premiums for a 55-year-old couple, each buying that amount of coverage, are $3,050 a year.
Tax Advantages of Buying Long-Term Care Insurance
Long-term care insurance can have some tax advantages if you itemize deductions, especially as you get older. The federal and some state tax codes let you count part or all of long-term care insurance premiums as medical expenses, which are tax deductible if they meet a certain threshold. The limits for the amount of premiums you can deduct increase with your age.
Only premiums for “tax-qualified” long-term care insurance policies count as medical expenses. Such policies must meet certain federal standards and be labeled as tax-qualified. It’s our job to ensure you purchase a tax-qualified long-term care insurance policy.
The American Association for Long-Term Care Insurance advises working with an experienced long-term care insurance agent who can sell products from at least three carriers. Progressive Concepts Insurance will do that for you.