Long Term Care Coverage: Know Your Options
By 2060, it is predicted that the U.S. population over age 65 will double and those over age 85 will triple. Longevity can be a double-edged sword as the need for long-term care (LTC) services increase as we age. A LTC policy can provide a safety net to help pay for nursing home and other services that you may need as you age. Not surprisingly, applying at a younger age when you are healthy is recommended if you desire this coverage. But did you know that you may be able to deduct all or a portion of the premium? Individuals who itemize may deduct the lesser of the actual premium paid or the “eligible” LTC premium which ranges from $480 per year if under 40 to $5,960 per year if age 71 or older (2023 numbers). This medical expense deduction is allowed if expenses (including the premium) exceed 10% of your adjusted gross income.
Some LTC coverage options include:
- Self-funding (you pay for your own costs)
- Stand-alone LTC policy (providing for LTC services only)
- Hybrid policy (life insurance policy providing LTC rider which accelerates death benefit to pay for your care if needed or linked-benefit benefit that provides an inflation rider to keep up with rising costs)
- Care-coordinated benefits (available with stand-alone policies and some hybrid policies to help identify options for LTC best suited to your needs)
Which is right for you? You’ve heard it before but it really does “depend” on your individual facts and circumstances. A LTC policy, on its own or combined with other strategies, can be a valuable tool to protect you and your family.