Is Long-Term Care Insurance a Good Idea? November 23, 2019 General Citizens Trust Investment Services, Long-Term Care Insurance 0 Is Long-Term Care Insurance a Good Idea? When deciding whether or not to buy long-term care insurance, consider the potential cost of care, the cost of insurance premiums, and the coverage provided. There is a good possibility that you or your spouse will eventually require some form of long-term care (LTC). According to the Centers for Medicare & Medicaid Services, at least 70% of people aged 65 or older will require some form of long-term care services and support during their lives.1 Whether you or your spouse will be among this group is impossible to predict. But it is wise to consider how you might pay for long-term care and whether long-term care insurance is a good idea for you. Cost of Care Perhaps the first consideration is determining the potential cost of long-term care. Below is a summary of current costs according to the Genworth 2017 Cost of Care Survey. Median costs in the United States:1 $235/day for a semi-private room in a nursing home $267/day for a private room in a nursing home $3,750/month for care in an assisted living facility (for a one-bedroom unit) $135/day for a home health aide $131/day for homemaker/companion services With health care costs rising every year, these expenses can be expected to grow substantially over time. Furthermore, neither Medicare nor Medicare supplemental coverage, also known as Medigap insurance, typically cover long-term care. Medicaid will cover a large share of such services but only if you meet stringent financial and functional criteria. What's more, most employer-sponsored or private health insurance plans follow the same general rules as Medicare. Therefore, most people who need long-term care must pay for some or all of it on their own. Cost of Insurance Like life insurance, long-term care insurance policy premiums largely depend on your age and health. If you take out a policy when you are young, you can expect to pay comparatively low premiums during the life of the plan, while starting a new policy when you are older will entail significantly higher monthly premiums. Most long-term care policies sold today are federally tax qualified, which means the premiums paid and out-of-pocket expenses for long-term care may be applied to the medical expense deduction of the federal tax code. (For tax year 2018, seniors may deduct the portion of medical and dental expenses that exceed 7.5% of adjusted gross income.) Additionally, long-term care benefits received are not taxed as income up to certain limits. Consult with a tax advisor to learn more about the tax implications of long-term care insurance. Coverage Long-term care policies are complex and vary widely. But in general, long-term care insurance typically covers the following: Nursing home care Adult day care Visiting nurses Assisted living In-home assistance with daily activities LTC includes a range of nursing, social, and rehabilitative services for people who need ongoing assistance due to a chronic illness or disability. LTC insurance can be used by anyone at any age who suffers an accident or debilitating illness, but it most frequently is used by older adults who need assistance with essential physical needs, such as bathing, dressing, or eating. Other Considerations Deciding whether to purchase long-term care insurance will depend on your personal situation. You may want to consider your family health history, your level of assets to potentially pay for long-term care, and your feelings about relying on family members for support. Probing these and other individual circumstance can help you make a well-informed decision. 1Source: Genworth, 2017 Cost of Care Survey, 2017. Because of the possibility of human or mechanical error by DST Systems, Inc. or its sources, neither DST Systems, Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall DST Systems, Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content. © 2018 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions. William J "Bill" Cortus, CFP® ChFC® Vice President LPL Financial Consultant CA Insurance Lic#0D96803 CitizensTrust Investment Services 701 N. Haven Ave. Ontario CA 91764 bill.cortus@lpl.com 909 532-0946 Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). 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