When it comes to planning for a sound financial future, young professionals building a career have much to think about. And, it’s only natural to think of long-term care as something essentially for one’s parents or grandparents. Nothing could be farther from the truth and regrettably many people put off gaining an understanding of the topic until it is too late. The analogy is waiting for a hurricane to hit your city before devising a plan to protect your home and family.
What Is Long-Term Care? Quite simply, long-term care refers to a broad range of medical and personal services and assistance that is provided over an extended period of time. Most people associate needing long-term care as a result of aging or a cognitive impairment such as Alzheimer’s disease. But, many younger people require long-term care services following accidents. Typical ones you hear about are motorcycle accidents or falling off the roof while cleaning gutters.
The mention of long-term care also generally brings to mind images of a nursing home. Again, a false impression, as most long-term care today takes place in ones own home or a facility other than a skilled nursing care facility.
Who Pays for Long-Term Care? Generally speaking, any health insurance you may have on either an individual basis or through your employer only pays for doctor and hospital bills. As a result, most of the costs for long-term care are not covered by these plans. And, when you reach retirement age and qualify for Medicare, it’s important to understand that Medicare pays little of the cost (if any) for long-term care.
So, who pays? Most often the individual receiving the care or their family members pay. Like medical expenses, long-term care can be equally costly – especially if you have to pay the entire cost from your own savings. Some 30 years ago, insurers began offering a form of protection called long-term care insurance designed to pay for qualifying care. Today, some eight million Americans – ranging in age from their 20s to their 90s own long-term care insurance protection. That number grows yearly.
What Does Insurance Cost? The cost of long-term care insurance is determined by certain factors. These include your age when applying for protection, the amount of benefit you are eligible to receive and whether you opt for protection that pays for care in your own home.
The younger you are, the less long-term care insurance protection costs. But, while insurance premiums generally increase about nine percent for each year you wait to apply, here is the most important fact younger people fail to recognize; one must health qualify for long-term care insurance. Your good health today can qualify you for significant yearly savings (similar to how good driving habits will reduce your car insurance). Perhaps more important, a change in your health — even one that is not life threatening — can cause you to pay as much as 20 percent more each year or make it impossible for you to qualify no matter how much you are willing to pay.
Long-term care insurance protection can be far more affordable than young people think. Leading insurance companies offer discounts to married couples that can reduce the cost by 40 percent yearly when both partners obtain coverage. An increasing number offer discounts for unmarried adults who are living together.
Some other ways to significantly reduce the cost is by adding a deductible period (referred to as an Elimination Period in long-term care insurance protection), choosing a limited benefit period (say one that pays benefits for three years versus one that provides unlimited coverage.
Can Insurance Be Tax Deductible? The short answer is, it can be — especially if you own your own business. Recognizing that government programs do not adequately pay for long-term care insurance, federal and a growing number of stet tax codes now offer tax incentives to encourage Americans to take personal responsibility for their future long-term care needs.
Business owners can deduct the cost of long-term care insurance protection for themselves, for their spouse and their tax dependents on a favorable basis. Owners may be able to deduct 100 percent of the cost and a knowledgeable long-term care insurance professional can tell you how to qualify.
Does Your Employer Offer LTC Protection? Long-term care insurance policies are increasingly being offered as an employee benefit. In many cases these policies offer outstanding benefits and affordable protection. Some employers will even pay for a base-level of insurance protection and allow employees to purchase additional levels at discounted rates. If your employer offers you a minimal level of long-term care protection at no cost. be certain to take advantage of this no-cost benefit.
Younger individuals who would qualify for good health discounts as well as spousal and partner discounts should compare policies offered by the employer with those available from an independent insurance professional. You may find you are able to obtain higher levels of protection for less cost.