Questions From Listeners: Long Term Care Insurance

BOSTON (WBZ-AM) -- Q: It was suggested that I buy long term care insurance, but I am not sure I need it. Help?

I wish I had a crystal ball that allowed me to know who would need long term care. But I don't! As we age we begin to have concerns about our living arrangements and who will care for us if we cannot care for ourselves.

Long-term care is the care needed for individuals with chronic disabilities. This care could be in the individual’s home or it may mean custodial care in a nursing home.

There are only 1.7 million nursing home beds (in 15,700 nursing homes) and they are not all filled. Seventy percent of the residents are relying on Medicaid to pay their bills.

According to AARP only 2% of Americans age 65 to 84 and 14% of Americans age 85 or older live in nursing homes. Many older individuals may enter a nursing home using it as a rehab facility after surgery such as a knee replacement but then it is covered by their health insurance.

The rate of nursing home use increases with age and almost 50% of those 95 and older live in nursing homes.

The odds are you will not need a nursing home, but if you are part of the 2% how will you pay for your care? Can you self-insure, rely on Medicaid to help you because you have no assets with which to pay or will you buy insurance?

According to Genworth’s Long-Term Care survey, the average cost of a semi-private room in a nursing home is $135,000 annually here in Massachusetts. That’s about $370 a day.

The younger you are when you purchase long-term care insurance the cheaper it will be. A 65-year-old couple in good health (you don’t think they want to insure the sick people do you?) can purchase a policy with a 90-day waiting period, a 3-year benefit period, $150 a day benefit for either home care or nursing home care for under $5,000 a year.

Start with your employer to see if they offer LTC insurance in the form of a group policy. Get quotes from reputable insurance companies and compare the policies.

I got online with several different companies and the price varied as much as $500 for what appeared to be the same coverage. Two things will affect the cost of your premiums, your age and your health. The older you are the more expensive the policy.

One more thing:  The cost of LTC is a tax deduction if you itemize. The older you are the larger the deduction. It gets lumped in with your medical expenses. Medical expenses must exceed 7.5% of your income for 2018 before you can use the deduction.

2018 Long Term Care Insurance Federal Tax-Deductible Limits

Taxpayer's Age at End of Tax Year             Deductible Limit

40 or less                                                        $420  

More than 40 but not more than 50              $780  

More than 50 but not more than 60              $1,560

More than 60 but not more than 70              $4,160

 More than 70                                                 $5,200

You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m. and 3:55 p.m.

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