Long term care questions and answers

People without long term care insurance must often rely on Medicaid, which only pays for services after their personal assets are depleted and they meet state guidelines for impoverishment, or their relatives. The solution? A long term care policy. We're proud to represent all the major providers.

We can help you set up a long term care plan for you, your family, or your employees. To find out more about this increasingly crucial topic, click on any area of interest below.

What is long term care?
Generally, long term care is the care people need when they can't independently perform the tasks of ordinary living. It isn't a subject most of us care to dwell on, but the failure to discuss or plan for the high cost of long term care is causing American families to find themselves unprepared to meet the high costs of long term care.

When you need long term care, you may need help with activities like bathing, dressing, toileting, continence, eating, and transferring. Or you may be able to carry out all your daily living activities, but still need care and supervision due to a severe cognitive impairment like memory loss or dementia. In those cases you may be able to dress yourself, but you may not remember to take your medications.

Long term care insurance generally covers personal care and other related services on an extended basis to people who need help with items listed above. (Note: it is not acute or rehabilitative care, which is known as skilled care.)
Won't my health insurance or disability insurance cover long term care?
Unfortunately, it usually won't. American health insurance has been designed to treat shorter term medical problems rather than to cover expenses made necessary by disability; for instance, it will often pay for hospitalization and medically necessary expenses, but not for many long term care services. Disability insurance, meanwhile, was designed to replace your wages if you cannot work. This amount usually covers expenses like food and housing, but is probably not enough to pay for long term care, which can be very expensive and stretch out over a long period of time. Long term care insurance was designed to bridge this gap.
How much does long term care cost?
The cost of long term care insurance can vary based on your health, age, marital status, the benefits you choose, and any discounts for which you're eligible. Contact us and we'll guide you through the options and costs.

The cost of going without long term care insurance can be much steeper. A few hours of daily in-home living assistance can cost between $5,000 and $14,000 per year. The average nursing home cost is approximately $50,000 per year. The average charge for assisted living is about $22,000 per year, and home care costs for the chronically disabled are about $15,000 per year.
I'm very healthy. Why do I need long term care insurance?
Long term care needs can occur at any age—and they can occur to both you and family members, requiring you to take extended time off work or contribute money to foot the bill.

Youth is not a guarantee: nearly 40% of people receiving long term care services are working adults between the ages of 18 and 64. About 11.5 million Americans require long term care services, with more than one-third of all costs coming out of their families' pockets. The largest group of caregivers providing help to someone 50 years or older is made up of people between the ages of 35 and 49. As you and your family members age, it gets a little scarier: more than 48% of Americans aged 65 and older will enter a nursing home during their lives.

Something else to note is that doctors and hospitals are under tremendous pressure to get patients out as quickly as possible, so patients often go to a nursing home to continue the recovery period. Taking out a long term policy for you and your loved ones may help you avoid draining your financial resources at the expense of your standard of living.

Many people purchase long term care insurance in order to preserve their independence, guarantee their choice of care and caregivers (including being able to stay at home for as long as possible), protect their assets and standard of living, avoid becoming a burden to their family, and prevent work interruption to care for aging family members. Some also purchase it in order to be able to leave more assets to their family, church, alma mater, and other worthy causes.
What's the cost of waiting?
Today's average cost of a nursing home admission will increase with inflation. Let's say you find a bargain: a nursing home willing to provide services for $40,000 per year. If you apply 5% inflation to that, the cost will be more than $50,000 in five years, more than $65,000 in ten years, more than $80,000 in 15 years and more than $105,000 in 20 years. To wait to protect yourself from tomorrow's cost could increase your premium by more than 262%.

Waiting also increases the annual cost of the insurance since your premium will increase by age. And while you don't have this insurance, you remain at risk in the event you have a health change and cannot qualify for coverage.
What are the advantages of buying a long term care policy while I'm young?
Coverage purchased at a younger age and better health makes the cost of insurance more affordable. Your policy can be paid up before retirement, too, improving your retirement finances.
What are the tax benefits of having a long term care policy?
If you itemize your deductions, you as an individual taxpayer may include the age-related premium as an inclusion amount within the allowable medical expenses that exceed 7.5% of adjusted gross income. (See Schedule A for allowed amounts.) Benefits received are tax-exempt from a reimbursement contract and up to $190 per day from an indemnification contract. However, if the insured is indemnified for an amount in excess of $190 and can provide documented healthcare expenses for the additional amount, it is not reportable income.
How does the need for long term care affect employers? (How could it affect my company?)
The need for long term care is an employer's problem, too. Approximately 10% of employees currently have eldercare responsibilities, but 40% expect to have such responsibilities within five years and one-third have an elderly relative living in a different city. According to a survey by the National Alliance of Caregiving (NAC) and AARP, in one year US employers lost more than $11.4 billion, or $1,142 per employee, in costs associated with family caregiving responsibilities.

By offering long term care insurance to your staff, you help provide financial security, responsibility, and freedom... help them preserve their retirement accounts and savings... protect their ability to keep working... and help ensure they can receive quality care for themselves and/or family if it is later needed. Employer-paid premiums are not taxable as income, long term care benefits are not taxable, and the coverage is fully portable.
What are the benefits to a C corporation for providing long term care insurance?
Premium payments paid by a C Corporation are tax deductible, taken as a deduction on Form 1170. These payments are not taxable income for the employees, including the owner(s). The benefits are not taxable when received by all covered participants from a reimbursement contract and up to $190 (adjusted upward annually for inflation) per day from an indemnification contract. However, if the insured is indemnified for an amount in excess of $190 and can provide documented healthcare expenses for the additional amount, it is not reportable income. And last but not least, long term health care coverage can be purchased for a specific class of employees, allowing the employer to choose specific employees by establishing various categories.
What are the benefits to an S corporation for providing long term care insurance?
Premium payments paid for all covered employees by a S Corporation are tax deductible: the owner(s) may deduct up to 100% of age-related premiums. (See Schedule A for allowed amounts.) To the extent that they qualify, owners may take the difference between the age-related premium and the actual long term care premium as a medical deduction on Schedule A. Long term care benefits for the owner and employees are tax-exempt from a reimbursement contract and up to $190 per day from an indemnification contract. However, if the insured is indemnified for an amount in excess of $190 and can provide documented health care expenses for the additional amount, it is not reportable income. Non-owners do not have to report as taxable income any amount for the long term care coverage they're provided.
What are the benefits to firms that are not incorporated and partnerships?
Self-employed owners or partners may deduct up to 100% of age-related premiums. To the extent that they qualify, owners or partners may take the difference between the age-related premium and the actual long term care premium as a medical deduction on Schedule A. Benefits for self-employed owners, partners and employees are tax-exempt from a reimbursement contract and up to $190 per day from an indemnification contract. However, if the insured is indemnified for an amount in excess of $190 and can provide documented health care expenses for the additional amount, it is not reportable income. Employees do not have to report as taxable income any amount for the long term care coverage they're provided.
Where can I find a good long term care policy?
There are many good plans available that can protect you. Contact us today for more information, and we'll walk you through understanding your options and help you select a long term care policy that's right for you, your family, and your company.