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Part IV – Long-Term Care Insurance: Where to Start?

Part IV – Long-Term Care Insurance: Where to Start?

November 18, 2019

When can it be used?


You anticipate the need for long-term care, you wish to protect your assets for your loved ones, and you can afford to pay the premiums.


When buying an LTCI policy, you must consider not only whether you can afford to pay the premiums now, but also whether you'll be able to continue paying premiums in the future, when your income may be substantially decreased. Overall, however, purchasing LTCI is a wise move for older Americans who are financially comfortable (or who are at least able to afford the premiums), who wish to maintain control over assets for as long as possible, and who'd rather give away houses and other assets to loved ones.



How to do it


If you are interested in purchasing LTCI, there are a couple of steps you should follow:


Compare policies and check the financial security of the companies you're reviewing


You can determine the financial security of a company by reviewing its A. M. Best's rating along with the ratings of other services, such as Moody's or Standard & Poor's, at your local library. You should select a company that has received a rating of A or A+ from A. M. Best.


Review the policy's provisions carefully to ensure that it offers the features you require


There are a number of factors you should be concerned about, such as inflation protection, a full range of care (including home health care), and exclusions for pre-existing conditions.



Tax considerations


Income tax


Benefits you receive from a "qualified" LTCI policy are not taxable to you as income and are treated as excludable benefits received for personal injury and sickness to the extent that such benefits do not exceed a per diem limitation. However, benefits received from a policy that is not a tax-qualified one might be taxable as income.




Federal law allows you to deduct all or part of the premium paid for a tax-qualified (LTCI) contract. A portion of your LTCI premium should be added to your other deductible medical expenses. To claim a tax deduction, the total of your medical expenses must exceed 10 percent of your adjusted gross income.


Caution: Not all long-term care contracts are tax-qualified--your policy must meet certain federal standards.

The information in this newsletter is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the ¬purpose of ¬avoiding any ¬federal tax penalties. You are encouraged to seek advice from an independent professional ¬advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the ¬purchase or sale of any security. This material was written and prepared by Broadridge Advisor Solutions. © 2019 Broadridge Investor Communication Solutions, Inc.