Planning for Long Term Care - Long Term Care Insurance
There are many considerations to take when purchasing a long term care insurance policy. In this article I am going to highlight several talking points.
Types of Policies
All policies are different and you need to be familiar with what your policy covers. Most policies sold today are called "comprehensive" and can cover several types of care. They can cover care in one or more of the following settings:
- Adult Day Health Centers
- Respite Care
- Assisted Living Facilities
- Alzheimer's Special Care Facilities
- Nursing Homes
Using your long term care insurance can be complicated. If your policy was purchased several years ago, it may not contain the "comprehensive" language. Your policy may only cover one of these types of care. For instance your policy may only cover Nursing Home Services and not home care services such as personal care/bathing, Medication Reminders, Meal Preparation, Light Housekeeping or transportation.
Like with many insurance policies, the terms of your policy may be negotiable. You will need to contact your long term care insurance company or the agent that sold you the policy.
You may be thinking to yourself "My mom bought her policy 25 years ago. The agent is probably long gone." If this is the case, contact us, we will be willing to take a look at your policy and make recommendations.
An Elimination Period is the number of days after the Original Coverage Effective Date of this Policy during which You must be: (1) Chronically Ill; and (2) receiving Primary Services, before certain benefits become payable. These days need not be consecutive. One way to adjust the cost of a long term care policy is to adjust the elimination period. In general, a longer elimination period means less premium per month.
Long Term Care Insurance and Tax Deductions?
Richard A. Roth, Attorney at Law explains that "Long term care insurance deduction gets better. If you paid for long term care insurance, you may be entitled to a deduction on your Missouri return even if you did not itemize. Missouri allows a deduction for long term care to the extent not included in your itemized deductions. "
"This appeared on last year’s Missouri return on line 17. If you are self employed it is even better. For this year only, you get to deduct all health insurance premiums, including long term care, as a business expense. This reduces your SE tax as well as your income tax. Since this is not included in your Missouri itemized deductions, you get to deduct the long term premium on your Missouri return."
"The moral of this story is: be sure to tell your tax preparer the amount you paid for long term care and keep it separate from regular health insurance. Do this even if you do not normally itemize."
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