Insurance Basics: Long Term Care

BOSTON (CBS) – As we age we begin to have concerns about our living arrangements and who will care for us if we fall or get sick.

In the book, Still Alice, Alice was going to need long term care at age 51 because of early onset Alzheimer’s. And her children stepped in to help keep her at home.

Long term care is the care needed for individuals with chronic disabilities. This care could be in the individual’s home or it may mean custodial care in a nursing home.

There are only 1.7 million nursing home beds (in 15,700 nursing homes) and they are not all filled. Seventy percent of the residents are relying on Medicaid to pay their bills.

According to AARP only 2% of Americans age 65 to 84 and 14% of Americans age 85 or older live in nursing homes. Many older individuals may enter a nursing home using it as a rehab facility after surgery such as a knee replacement but then it is covered by their health insurance.

The rate of nursing home use increases with age and almost 50%S of those 95 and older live in nursing homes.

The odds are you will not need a nursing home, but if you are part of the 2% how will you pay for your care? Can you self-insure, rely on Medicaid to help you because you have no assets with which to pay or will you buy insurance?

According to Genworth’s Long Term Care latest survey, the average cost of a semi-private room in a nursing home is $135,000 here in Massachusetts. That’s about $370 a day.

The younger you are when you purchase long-term care insurance the cheaper it will be. A 65-year-old couple in good health (you don’t think they want to insure the sick people, do you?) can purchase a policy with a 90-day waiting period, a 3-year benefit period, $150 a day benefit for either home care or nursing home care for under $5,000 a year.

Start with your employer to see if they offer LTC insurance in the form of a group policy. Get quotes from reputable insurance companies and compare the policies.

I got online with several different companies and the price varied as much as $500 for what appeared to be the same coverage. Two things will affect the cost of your premiums, your age and your health. The older you are the more expensive the policy.

Check out the office of Health and Human Services in Boston for more information.

One more thing:  The cost of LTC is a tax deduction if you itemize. The older you are the larger the deduction. It gets lumped in with your medical expenses. Medical expenses must exceed 10% of your income before you can use the deduction.

2017 Long Term Care Insurance Federal Tax-Deductible Limits

Taxpayer’s Age At End of Tax Year             Deductible Limit
40 or less  $ 410
More than 40 but not more than 50  $ 770
More than 50 but not more than 60 $1,530
More than 60 but not more than 70 $4,090
More than 70 $5,110

………………..

You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.

Subscribe to Dee’s Money Matters newsletter here.

More from Dee Lee
Comments

One Comment

  1. Matt McCann says:

    Most Long-Term Care Claims are for care at home, adult daycare and assisted living. The idea a is to try to avoid the need for a nursing home. Affordable LTC insurance will safeguard assets and ease the burdens extended care places on loved ones.

    In Massachusetts, you have property protection if you have a qualified LTC policy. A policy must provide certain benefits in order for you to qualify for the MassHealth eligibility and recovery exemptions. When you enter a nursing home, your policy must:

    cover nursing-home care for at least 730 days;
    pay at least $125 per day for nursing-home care; and
    not require an elimination period (days that services must be provided before your policy will begin to pay) of more than 365 days, or in lieu of a waiting period, a deductible of more than $54,750.

    In most other states you have partnership policies available which provide dollar-for-dollar asset protection.

    Most people are buying LTC insurance in their 40’s and 50’s …well before retirement when premiums are much less expensive and most people qualify for better rates. plus federa tax incentives exist for some people, some states have tax incentives as well – this link provides state by state information https://mccannltc.net/resources/state-information

Leave a Reply

Please log in using one of these methods to post your comment:

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

More From CBS Boston

Opioid Crisis
Download Our App
Download Weather App

Watch & Listen LIVE