- Why should I apply for long term care insurance?
- Is long-term care insurance a "bad investment?"
- What is the average daily benefit?
- How is the average daily benefit calculated?
- Where can I go for further information?
- What is the average assisted living facility cost yearly?
- What is the best long term insurance company?
- What are ADLs?
- How is long term care considered by the IRS?
- Are long term care insurance expenses deductible?
- How are benefits from the policy treated by the IRS?
- Why choose long term care insurance over Medicaid?
Eventually, the majority of us reach a point in our lives where
we are no longer able to take care of ourselves. Whether the cause
is from an accident, onset of an illness such as Parkinson's disease
or stroke, or age, more than likely there will be a time where we
will need extended long term care. Americans over the age of 65
face a 40% risk of entering a nursing home for Long Term Care services.
A year in a nursing home now averages more than $40,000 and can
exceed $100,000 annually in some parts of the country."
- The Wall Street Journal 3/31/99
Premiums for long term care insurance rise with age. Also, your health plays a factor in your premium. If you wait to long before applying for long term care insurance your age and health may make it very expensive or even impossible to qualify for a policy.
Answer provided by MR.LTC
I purchased a Lifetime Benefit long-term care policy at the age of 42. Premiums are less than $1,000/yr. This year, at age 51, I went into claim to reimburse expenses associated with Early-Onset Parkinson's Disease. Assuming I live until my life expectancy (not uncommon with PD), and my policy pays its maximum benefit schedule, here's the final tabulation:
I will have paid less than $9,000 in premium and received more than $2,190,000 in reimbursed expenses.
This is the rate determined by your policy provider which will cover your daily benefits. On average they range from $130 to $200 daily depending on your location. View Your State's Average Daily Benefit.
This is calculated by your provider.
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Assisted living facilities can cost upwards of $100,000 a year with rates expected to continue to rise as the baby-boomer population reaches retirement age.
When choosing a long term care insurance company, there are a few characteristics that you should consider. Knowledge is as they say power. Get to know your potential provider.
The first is the financial stability of the company. You may not begin to collect benefits for 10 or 20 years. Be sure to find a company that you expect to be around when your benefit collection period begins.
Secondly, consider the stability of their premiums. Companies have the right to raise premiums at anytime. Be sure to research the premium rate history of the company and be cautious of companies whose policies are far below their competitors.
The third and maybe most important characteristic are claims. Ask your agent the percentage of claims paid versus the amount of claims filed.
The basic activities and functions performed on a daily basis that are usually done without assistance. The six ADLs are:
LTC is considered a medical expense by the IRS.
According to the tax code, for people who itemize tax deductions, medical expenses are deductible if they exceed 7.5% of adjusted gross income (AGI). For an individual, the portion of the LTC insurance premium that is deductible is determined by the age of the insured. However, if you are purchasing this for a parent and you are not considered a dependent, you are not entitled to a medical expense deduction.
For individuals, these benefits are generally not taxable. Back to top
Many planners refer to Long Term Care insurance as "asset protection". Medicaid eventually pays for Long Term Care services once an individual becomes impoverished. If you are able to pay Long Term Care insurance premiums without having to change your lifestyle, you should transfer that risk to the insurance company.