The short answer is …it depends. But let’s dig into the long answer about long term care insurance. (LTC)
By the time you add up health insurance, car insurance, homeowner’s insurance — and let’s not forget taxes—of course nobody really wants to think about (much less fork over the money for) optional “long term care insurance.” However, if one place you also park money is in a nest egg, you might want to reconsider—especially couples.
If a couple has a sizable nest egg for retirement and one spouse needs to move into an assisted living facility, the average $4,000 a month cost could put a substantial dent in that savings and leave the other spouse scrambling, possibly having to work or live on much, much less than intended well past retirement. If you’ve worked hard to build a retirement portfolio and savings, why not protect it?
On the flip side, LTC insurance can be pricey with the average premium being $300 a month. Premiums rise each year, and it’s like term life insurance, so if you decide you don’t want it anymore, you are forfeiting all the money you put into it. Plus, there is always the chance that you won’t need it after all.
What exactly is LTC insurance?
In a nutshell, long term care insurance is designed to cover what medicare and medicaid won’t. Since government programs have “qualifying requirements” (in other words, you have to meet certain financial minimums), long term care insurance is pretty much to protect your financial assets. It may cover in-home care, assisted living, nursing home care, home modification and more. Otherwise, to get these types of things covered you would typically have to deplete your savings to qualify.
At what age should you get LTC insurance?
It’s recommended that LTC insurance be secured by age 65 but of course, the older you are, the more it will cost. 95% of long term insurance claims are filed after age 70 so that just goes to show you that, unless you have some kind of outstanding family medical history like Alzheimer’s, you don’t need to sign up too early.
Can you write off long term care insurance as a medical expense?
Why yes, you can! That’s right. You can deduct your long term care insurance premium. Of course, just like any good tax deduction protocol, there are guidelines that must be met. (Read this Forbes article for details.)
There are a lot of considerations for obtaining long term care insurance but remember, the average assisted living facility is $4,000 a month and nursing homes can be up to $8,000 a month. So that may make your long term care insurance at $4,000 a year seem like a bargain if you end up needing to use it.
As always, consult your insurance agent about your specific policy to be sure what is — and isn’t — covered. We know that most aging adults want to maintain as much of a sense of independence as possible and stay in their homes for as long as they can. Most, if not all, in-home care is private pay and if you have long term care insurance that will cover it when the time comes, you’ll be glad you did.