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Sound Advice: December 13, 2023

What You Need To Know About Long-Term Care Insurance

Long-term care insurance (LTCI) is a type of insurance that helps cover the costs of long-term care services, such as assistance with activities of daily living (ADLs) such as bathing, dressing, and eating. It can also cover the expenses associated with care in a nursing home, assisted living facility or at home by a professional caregiver. Here's what you need to know about long-term care insurance:

1. Not Covered by Health Insurance or Medicare:

  • Long-term care services are generally not covered by health insurance or Medicare, which only provide limited coverage for skilled nursing care and rehabilitative services. Medicaid covers long-term care, but you need to meet strict income and asset requirements.

2. Costs of Long-Term Care:

  • Long-term care can be expensive and can quickly deplete your savings. LTCI helps to cover these costs, providing financial security and ensuring you can access the care you need.

3. Policy Coverage and Benefits:

  • LTCI policies vary widely in coverage and benefits. Some policies cover care at home, while others cover care in a facility. Policies may also have different waiting periods before benefits kick in and varying benefit periods (the length of time benefits will be paid). It's crucial to understand the terms and conditions of the policy.

4. Premiums and Eligibility:

  • Premiums for LTCI can be expensive, and they often increase as you age. Additionally, your eligibility for LTCI may depend on your health at the time of application. It's generally easier to qualify and get lower premiums if you apply when you're younger and in good health.

5. Inflation Protection:

  • Long-term care costs tend to increase over time due to inflation. Some LTCI policies offer inflation protection options, which increase your coverage amount to keep pace with rising costs.

6. Care Providers and Facilities:

  • LTCI policies may have specific requirements regarding the qualifications of caregivers and the facilities where care is received. Make sure you understand these requirements and that they align with your preferences.

7. Exclusions and Waiting Periods:

  • LTCI policies often have exclusions for pre-existing conditions and waiting periods before coverage begins. Understand these limitations before purchasing a policy.

8. Tax Benefits:

  • Depending on your state and the policy, you might be eligible for state tax deductions or credits related to LTCI premiums. Consult a tax adviser for details.

9. Consult with a Financial Adviser:

  • LTCI can be complex, and policies can vary significantly. It's advisable to consult with a financial adviser who specializes in insurance and retirement planning. He or she can help you find a policy that suits your needs and budget.

10. Review and Update:

  • Regularly review your policy to ensure it still meets your needs, especially if your health or financial situation changes. Adjustments or changes to the policy might be necessary over time.

Purchasing long-term care insurance is a significant decision that requires careful consideration and planning. It's essential to research your options thoroughly and consult with professionals to make an informed choice based on your individual circumstances.

N. Russell Wayne, CFP

Any questions?  Please contact me at nrwayne@soundasset.com

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