Long-Term Care Insurance

Costs associated with long-term care health expenses will vary among individuals, and the U.S. Department of Health and Human Services estimates that most Americans who reach age 65 will need some type of long-term care. Long-term care insurance can offset the costs of long- term care as you age. Additionally, it is a great way to protect the savings you have worked so hard to build.

Long-Term Care

Long-term care encompasses a variety of services meant to help individuals who are unable to care for themselves. Such services include help performing activities of daily living (ADLs)—dressing, bathing, and eating due to an illness, injury, or aging. Long-term care services vary based on location and level of engagement, both of which are dependent on the specific needs of the individual receiving the care. Included are services provided in the home, assisted living facilities, nursing home long-term care, and hospice end-of-life care.

Funding Long-Term Care Insurance

Medicare and other health insurance plans generally will not cover long-term care. Due to Medicaid’s strict income limits, retirees are forced to deplete savings before applying for assistance. As such, there are limited options to aging individuals without long-term care insurance.

For those individuals who opt for a private long-term care insurance policy, the costs can be substantial. While shopping early for a policy can lessen the cost, it is impossible to know the age at which you will need long-term care. Therefore, plan to buy long-term care insurance based on what is likely to happen to you and when you will likely need coverage. A policy should fit your budget—buy only what you need and what you can afford to pay.  Many long-term care policies cover home health services. Buying enough coverage for home health services will enable you to counter the cost of a nursing home, should your condition require nursing home care.  Work with an independent agent and consider quotes and coverage from different companies and at different levels. Age, gender, health condition, and the region you will live in all drive policy costs.

Tax Benefits for Long-Term Care Insurance

Since it is possible that medical, dental, and vision services will all be needed in retirement, the Federal government and several states now offer tax incentives for Americans who personally invest in their long-term care needs. For 2021, qualified long-term care premiums can be included as medical expenses for individuals who itemize. Tax incentives are on a sliding scale and increase with age. The maximum deduction is $1,690 for individuals ages 51 to 60, while individuals over age 71 are entitled to a deduction of up to $5,640.

Planning for long-term care is an important decision. Your investment in long-term care insurance can help you stay in your home longer, protect your savings and retirement assets, and remove the burden of care from friends and family members.