An unexpected accident or serious illness can seriously impact your financial resources – unless you’ve planned ahead. Although you might think that you have effectively planned for your financial future by participating in an employer-sponsored 401(k) plan, and/or health, disability and life insurance benefits, you’ve most likely overlooked an important piece of the puzzle. Typical health benefits and disability insurance plans aren’t designed to pay for expenses when you require in-home nursing care, or admission to a nursing home when you are faced with the inability to perform everyday activities such as eating, bathing and dressing. And neither long-term disability nor Medicare will cover such care.
Long-term care insurance is exactly the type of coverage you need to protect your assets from being rapidly depleted when faced with the unexpected inability to perform the everyday tasks which most of us take for granted. Long-term care covers these services over long periods of time, either in your home or in a facility that provides long-term care.
Here are some commonly asked questions about this type of insurance.
Q. What’s the cost of long-term care?
A. Without planning for such coverage, you could be faced with an annual cost of $40,000-70,000. Depending on the facility and the area of the country, an average nursing home stay can reach $160,000 or more.
Q. Don’t Medicare and my health insurance provide full benefits?
A. No. These programs are intended to cover hospital and physicians’ costs, not long-term care expenses. Many of those who enter and pay for nursing home care out of their own savings deplete their entire savings and therefore must apply for Medicaid, the government program for the financially impoverished. Those who have accumulated significant assets for retirement are most at risk, as Medicaid will not pay until all other financial resources are exhausted.
Q. Are there any tax advantages to purchasing long-term care insurance?
A. Yes. The federal government passed the Health Insurance Portability and Accountability Act of 1996 which provides tax incentives to people who purchase tax-qualified long-term care plans. These incentives, subject to limitations, include:
- Long-term care insurance benefits received by a claimant will be tax-free to the recipient.
- Long-term care insurance premiums are deductible as a medical expense for those who itemize.
When the ability to perform simple tasks is taken away by an unexpected accident or serious illness, long-term care insurance will be your financial savior. For more information about a long-term care policy that’s right for you, Financial Brokerage Services today at (301) 320-2000. For nearly 30 years, we’ve been delivering affordable, high-quality insurance Maryland and Virginia residents count on.