Not everyone needs Long Term Care Insurance
However, everyone needs a plan for long term care.
Long Term Care Insurance (LTCI)
What is Long Term Care?
Someone with a prolonged physical illness, a disability, or a cognitive impairment often needs long-term care. Many different services help people with chronic conditions overcome limitations that keep them from being independent. Long-term care is different from traditional medical care.
Where does long term care occur?
Community Based Services, Home Health Care, Adult Day Care, Board and Care Homes, In-Law Apartments, Conntinuing Care Retirement Communities, Housing for Aging, Assisted Living, Nursing Home and Hospice.
What does long term care cost?
The average cost of care in Georgia today is over $59,000 annually. But today is not your problem. It is anticipated the cost of care in 25 years will be over $150,000 annually.
The average stay in care for nursing home is 2.4 years, assisted living is 18 months and home health care is 4.5 years.
Who Pays for Long-Term Care?
People pay for long-term care in a variety of ways. These include: using personal resources of individuals or their families, long-term care insurance and some assistance from Medicaid for those who quality. Medicare, Medicare Supplement Insurance and the health insurance you may have at work usually will not pay for long-term care.
Individual Personal Resources: Individuals and their families generally pay for part or all of the cost of long-term care from their own funds. Many use savings and investments. Some people sell assets, such as their homes, to pay for their long-term care needs. Long Term Care Insurance is designed to help protect your assets.
The Impact of Long Term Care.
Elder care will replace child care as the number 1 dependent care need in the next century. One out of every three adults will be caring for an aging family member.
2008 TAX DEDUCTIBLE LIMITS FOR LTCi
The Internal Revenue Service (IRS) has announced increased deductibility levels for long-term care insurance policies purchased in 2007. According to Jesse Slome, Executive Director of the American Association for Long-Term Care Insurance, “millions of Americans, especially those who own small and mid-sized businesses are unaware that the cost of long-term care insurance protection may be tax deductible." In some cases 100 percent of the cost of coverage can be deducted.
“Increased tax deductible limits are another indication of the government's commitment to encourage Americans to purchase protection against the possible risk of needing long-term care," Slome notes. “" In addition to the federal tax deduction many states now offer tax incentives for individuals purchasing tax-qualified long-term care coverage.
The 2008 deductible limits under Section 213(d)(10) for eligible long-term care premiums includable in the term "medical care" are as follows
Attained Age Before Close of Taxable Year and Max Limit
40 or less: $310.
More than 40 but not more than 50: $ 580.
More than 50 but not more than 60: $1,150.
More than 60 but not more than 70: $3,080.
More than 70: $3,850.
"Business owners, especially those with C-Corporations, can deduct the full cost of long-term care insurance protection for themselves and designated individuals, including spouses," explains Slome. "It's not just one of the few remaining tax deductible expenses available to business owners but an outstanding way to pay for post-retirement asset protection."
The American Association for Long-Term Care Insurance (www.AALTCI.org) is the national association serving insurance and financial professionals who provide long-term care financing solutions.
Reprinted by permission as a member of the American Association for Long-Term Care Insurance..
To benefit from tax deduction for individuals, the following critera are necessary:
1. You need to itemize your income tax deduction when you file your taxes.
2. Your total medical expenses have to exceed 7.5% of your Adjusted Gross Income (AGI)
- this includes your major medical premium
- any medical co-pays
- prescription medicine co-pays
- long term care insurance premium
- any disability/insurance premiums
Example: say your annual income is $30,000; your total medical expenses would have to exceed $2,250.00 for the year.
