Long-Term Care Insurance

The purpose of long-term care insurance is to minimize the financial impact associated with the costs of careing for those who are no longer able to care for themselves. Family members traditionally have provided long-term care; however not all families are able to provide this type of care. Long-term care requires a major personal sacrifice of time, money and emotional support. Many families have all adult family members active in the workforce with other families have members living in different parts of the world. These situations make the option of caring for a family member very difficult.

The overall costs of long-term care may vary widely. Those who require minimal care will have much lower costs than those who are confined to a nursing home and require constant care. The cost of long-term care can easily exceed a family member’s affordability.

Sources of long-term care income may include personal savings. If income and assets are low enough, Medicaid programs in most states provide some benefits. Also, paying in advance for a life-care facility is becoming more popular; however, the costs of such a facility are quite high and may be beyond many people’s ability. Another option is long-term care insurance, as private medical insurance and Medicare likely do not cover the costs of long-term care.

The following are important when considering your long-term care policy options:

• Amount and length of coverage
• Level of care (skilled nursing care, immediate care, custodial care, assisted-living care, adult day-care, respite care)
• Limitations and exclusions such as pre-existing conditions and restoration of coverage
• Inflation protection and coverage allowing for an increase in benefits

If the long-term care policy is a tax-qualified policy (the policy must meet certain conditions), the premiums you pay are eligible for a medical expense deduction on your income tax return in the year paid, subject to certain limits.

In general, benefits received from long-term care policies (regardless of their tax-qualified status) are not subject to income tax. However, per-diem policy benefits are subject to limits and any benefits in excess of certain limits are taxable. Per-diem policies pay out benefits regardless of the level of service required (compared with policies that provide benefits on a reimbursement of cost basis, up to certain limits).

Things to consider when purchasing long-term care insurance:

• Review your family health history to help determine the likelihood of requiring long-term care.
• Review your existing long-term care insurance coverage to determine whether it will meet your needs.
• Consider the importance of maintaining your net worth in order to accomplish your post-mortem estate planning wishes.
• Make an assessment of your long-term care options within the family and within your community and the costs of each.

Long-term care insurance is an important part of any financial plan, and there are various types of insurance policies available through your Ziegler Wealth Management financial advisor. Each policy is designed to suit the coverage and investment requirements of different clients. For a complete assessment of your needs and to help you determine which options are right for you contact your Ziegler financial advisor or our Client Service Center ate 888.816.4466.