Long-Term Care Update
Long-term care continues to be a challenging issue in the U.S. It appears the second wave of baby boomers is even more determined to “age at home,” while at the same time, they are more likely to suffer from multiple chronic conditions, such as heart disease and diabetes.1 This confluence of factors makes it all the more difficult to come up with solutions for long-term care.
To complicate matters, insurers that offer long-term care (LTC) insurance have become more particular about offering coverage. According to the American Association for Long-Term Care Insurance, more people are being denied coverage across the spectrum of age brackets. The following shows the percentage of applicants declined coverage in 2017:2
- Below age 50: 20%
- 50- to 59-year-olds: 22%
- 60- to 69-year-olds: 30%
- 70- to 79-year-olds: 44%
Not only have sales of traditional LTC policies decreased over the last 17 years (currently one-tenth of the sales in 2000), but there are now far fewer insurers in the marketplace.3
Although we often spend a lot of time on planning for retirement, we don’t always devote substantial time and resources to how to pay for potential long-term care expenses. We should. Like it or not, long-term care is expensive and likely to take up a large portion of our household budgets later in life. Some insurance products such as life insurance and annuities provide various options you may want to consider. We’d be happy to discuss your options based on your unique situation.
People are living longer but continue to develop health conditions that require caregiving as they age. As a result, LTC premiums continue to rise. However, traditional LTC premiums are considered a medical expense. For an individual who itemizes tax deductions, medical expenses can be deductible if certain qualifications are met. The amount of LTC insurance premiums that can be treated as a medical expense is subject to limitations based on the insured’s age.4
Also consider activating a chronic illness or long-term care rider that may be attached to your term life or permanent life insurance policy, as these riders can assist with the costs of long-term care should the need arise. Note that the ability to use this option is subject to specific contract terms. Also, benefits are generally treated as accelerated death benefits, which will reduce the overall death benefit of your life insurance policy.
If we can be of any assistance please give us a call at 801-990-5055.
Our firm assists retirees and pre-retirees in the creation of retirement strategies utilizing investment and insurance products. Advisory services offered through B.O.S.S. Retirement Advisors, a Registered Investment Advisory firm.. Insurance products and services offered through B.O.S.S. Retirement Solutions. Marketing materials provided by Infinity Marketing Services. Reverse mortgage loan origination services are offered through Just Reverse Mortgage (NMLS# 349667), a Utah licensed mortgage broker and subsidiary of B.O.S.S. Retirement Solutions.
To see a list of services please visit us at bossretirement.com/services.
1 Susannah Luthi. Modern Healthcare. June 5, 2018. “Azar touts new SNF pay model for making long-term care sustainable.” http://www.modernhealthcare.com/article/20180605/NEWS/180609963. Accessed June 9, 2018.
2 American Association for Long-Term Care Insurance. May 10, 2018. “It’s Harder To Health Qualify For Long-Term Care Insurance, Start Earlier.” http://www.aaltci.org/news/long-term-care-insurance-association-news/its-harder-to-health-qualify-for-long-term-care-insurance-start-earlier. Accessed June 15, 2018.
3 Greg Iacurci. Investment News. May 11, 2018. “Insurers becoming more stringent with long-term-care policies.” http://www.investmentnews.com/article/20180511/FREE/180519978/insurers-becoming-more-stringent-with-long-term-care-policies. Accessed June 10, 2018.
4 American Association for Long-Term Care Insurance. “Long-Term Care Insurance Tax-Deductibility Rules – LTC Tax Rules.” http://www.aaltci.org/long-term-care-insurance/learning-center/tax-for-business.php. Accessed June 15, 2018.
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