Life Events

Long-term care can be expensive, and it is often not covered by regular health insurance. Long-term care insurance is one way to prepare. Here are common questions.

What is long-term care?

It is help with the everyday activities of living, such as bathing, dressing, eating and moving around, or supervision because of a cognitive condition like dementia. Care can be provided at home, in an assisted living facility, or in a nursing home.

Doesn't Medicare or health insurance pay for this?

Medicare covers limited skilled care for a short time after a qualifying hospital stay, but it generally does not pay for ongoing custodial care. Medicaid can pay for long-term care, but only after you meet strict income and asset limits. See medicare.gov for what Medicare does and does not cover.

What does a policy typically include?

Policies vary, but key features include a daily or monthly benefit amount, a benefit period, an elimination period before benefits begin, and whether benefits increase with inflation. Policies pay when you cannot perform a certain number of daily activities or have a cognitive impairment, as certified by a professional.

When is the best time to buy?

Premiums are lower and approval is easier when you are younger and healthier. Many people consider it in their fifties or early sixties. Waiting too long can make coverage costly or unavailable.

Can premiums go up?

Yes. Many policies allow the insurer to raise premiums for an entire class of policyholders, with regulatory approval. Ask about the insurer's rate history and whether you could afford increases later.

Are premiums tax-deductible?

Premiums for a qualified policy can be treated as medical expenses, with limits based on age, but only if you itemize and your total medical expenses exceed the required portion of your income. Self-employed people may have a different option. Because the limits change annually, check irs.gov or ask us. Benefits from a qualified policy are generally not taxable up to certain limits.

What are the alternatives?

Some people self-insure by saving, while others consider hybrid products that combine life insurance or annuities with long-term care benefits. Each has trade-offs involving cost, flexibility and guarantees.

If you are weighing how to pay for care in later life, contact our office to talk about the financial and tax considerations.