WHY LONG-TERM CARE?
Since you can’t predict what your future needs will be, long-term care insurance can help you pay for the care you need, whether you are living at home or in an assisted living facility or nursing home. It might also pay expenses for care coordination and other services. Some policies will even help pay costs associated with modifying your home so you can keep living in it safely.
Long-term care policies bridge a critical gap in employer-based health coverage which will not pay for daily, extended care services. And, while Medicare will cover a short stay in a nursing home, or a limited amount of at-home care, it is only under very strict conditions.
KEY FACTORS WHEN CONSIDERING
LONG-TERM CARE OPTIONS
Your Age and Health
Policies cost less if purchased when you're younger and in good health. If you're older or have a serious health condition, you may not be able to get coverage — and if you do, you may have to spend considerably more.
You may have family and friends who can provide some of your long-term care should you need it. Think about whether or not you would want their help and how much you can reasonably expect from them.
A financial adviser — or a lawyer who specializes in elder law or estate planning — can advise you about ways to save for future long-term care expenses and the pros and cons of purchasing long-term care insurance.
Traditional long-term care insurance consists of an annual premium, for a predetermined future benefit of long-term care insurance. Inflation riders can be added to increase this coverage over time. There have been changes in the industry to reduce increases of premium, however this does not guarantee against an increase. One of our Certified Financial Planners will work with you to design an affordable policy to meet your needs.
If you have difficulty paying your bills now or are concerned about paying them in the years ahead, when you may have fewer assets, spending thousands of dollars a year for a long-term care policy might not be feasible. If your income is low, and you have few assets at the time you need care, you might quickly qualify for Medicaid. (Medicaid pays for nursing home care; in most states it will also cover a limited amount of at-home care.) Unfortunately, in order to qualify for Medicaid, you must first exhaust almost all of your resources and meet Medicaid's other eligibility requirements.
The benefits paid out through a long-term care policy are generally not taxed as income. Also, most policies sold today are "tax-qualified" by federal standards. This means if you itemize deductions and have medical costs in excess of 7.5 percent of your adjusted gross income you can deduct the value of the premiums from your federal income taxes. The amount of the federal deduction depends on your age. Many states also offer limited tax deductions or credits.
1. Traditional Long-Term Care
The most affordable and popular long-term care insurance.
2. Hybrid or Asset-based Policies
These policies generally combine long-term care funding with life insurance or an annuity.
3. Short-Term or Critical Care
These policies are ideal for older individuals who may have some health challenges.