Long-Term Care Insurance Tax Deductions

December 3, 2012

Filed under: Long-Term Care Insurance — Alexis @ 3:55 PM

Thinking about long-term care insurance (LTCI)? Hesitant because it is expensive?  Did you know that you might be able to deduct some of the premium on your taxes?

If you are an itemizer, then you can take deductions as follows (2013 figures):

Attained age in tax year Limitation on premiums
Age 40 or less $360
Age 41 – 50 $680
Age 51 – 60 $1,360
Age 61 – 70 $3,640
Age 71 and older $4,550

 

Not an itemizer?  You still can get a break – if all of your medical expenses, including LTCI premiums, exceed 7.5% of AGI, then you can claim a deduction on the portion of your medical expenses exceeding 7.5%.

So when you are looking at a LTCI quote, keep in mind that the actual cost to you may be a bit less than the annual premium.

And of course if you already have LTCI, make sure your CPA knows that you have it and how much you pay in annual premiums.

 

 

 

 

Another Good Reason to Buy Long-Term Care Insurance

November 1, 2012

Filed under: Long-Term Care Insurance,MassHealth — Alexis @ 2:59 PM

I talk to a lot of my clients about buying long-term care insurance (LTCI).  Many people come to my office asking about “nursing home planning” – how to make sure they don’t use up all of their savings if they end up in a nursing home.  And my response is always, “Your nursing home planning is to stay out of a nursing home.” And one key piece to keeping people in their homes with care, and out of the nursing home, is to have LTCI.

After seven long years of advocacy by MassNAELA (that’s the Massachusetts Chapter of the National Academy of Elder Law Attorneys), yesterday Governor Patrick signed a bill that makes LTCI an even better bet for seniors.

Until now, if seniors were lucky enough to have LTCI, they could of course use the policy to pay for care in their homes.  But – they’ve had to keep a careful eye on how much of the policy they were using up at home.  When home care is no longer medically viable, and the senior needs to go to the nursing home, then the LTCI would protect the value of their home from the cost of nursing home care – but only if they entered the nursing home with a certain amount of money still in the policy.  This had the effect of either (1) forcing seniors to leave their homes before they wanted to, or (2) staying at home longer and using up the policy benefits, finally going to nursing home, and losing the house to the cost of nursing home care.

Now things will be different – and better.  If a senior has a LTCI policy that meets MassHealth standards at the time of purchase, then she can use as much of that policy as she wants to stay in her own home for as long as she safely can.  Then, if she ever needs to move to a nursing home, no matter how little benefit is left in the policy, her home will still be sheltered from the cost of nursing home care.  This will help seniors stay at home longer, and will keep MassHealth’s costs down.  A win-win for seniors and MassHealth.

How Do You Purchase the Right Long-Term Care Insurance Policy?

December 10, 2008

Filed under: Long-Term Care Insurance — Tags: , — Alexis @ 3:38 PM

If you can afford the premiums, long-term care insurance (LTCI) is usually good investment in your future.  The right policy will pay for at-home care, medical equipment, nursing home care, and maybe even some of the monthly fees at an assisted living.  Actuarial tables demonstrate that in many cases, families that paid LTCI premiums over many years and then needed some increased care came out ahead as opposed to paying out of pocket for home care, nursing home care, etc. 

But how do you pick the right policy?  A December Wall Street Journal article described that Conseco, Inc. has shed its LTCI unit to a trust run by the state of Pennsylvania.  Observers suspect that this will not be the only company to give up its LTC customers.  

The best way to pick the right policy for you – and that may be very different from the right policy for your neighbor, sister, or best friend – is to work with a trustworthy financial advisor.  A good advisor should be able to generate quotes for you from several different companies and should walk you through the differences to help you make an informed decision.  While no one can predict the future, a good advisor should have a handle on which companies have strong holdings backing up their policies.  Your elder law attorney should have a relationship with one or more qualified advisors. 

And remember – financial advisors are paid by commission depending on which policy you ultimately buy.  Ask the advisor if he is willing to show you the commission statement associated with each of the quotes to make sure he is not steering you towards the one that benefits him the most, unless, of course, that happens to also be the policy that is best for you.