Long Term Care Insurance

Long term care insurance helps you remain independent, protects you and your family from financial hardship and avoids burdening your family. A long term care insurance policy may help to protect your assets and may give you greater control over your future health care options. There is much to know before purchasing a long term care insurance plan, and there are usually many adjustments you can make to a policy so that it is best-suited to your needs.



Factors to Consider

Your Age and health

Policies cost less if purchased when you're younger and in good health. If you're older or have a serious health condition, you may not be able to get coverage — and if you do, you may have to spend considerably more.

The premiums

Will you be able to pay the policy's premiums — now and in the future — without breaking your budget? Premiums often increase over time, and your income may go down. If you find yourself unable to afford the premiums, you could lose all the money you've invested in a policy.

Your support system

You may have family and friends who can provide some of your long term care should you need it. Think about whether or not you would want their help and how much you can reasonably expect from them.

Your savings and investments

A financial adviser — or a lawyer who specializes in elder law or estate planning — can advise you about ways to save for future long term care expenses and the pros and cons of purchasing long term care insurance.

Your taxes

The benefits paid out through a long-term care policy are generally not taxed as income. Also, most policies sold today are "tax-qualified" by federal standards. This means if you itemize deductions and have medical costs in excess of 7.5 percent of your adjusted gross income you can deduct the value of the premiums from your federal income taxes. The amount of the federal deduction depends on your age. Many states also offer limited tax deductions or credits.

Covered Services

Some insurance companies require you to use services from a certified home care agency or a licensed professional, while others allow you to hire independent or non-licensed providers or family members. Companies may place certain qualifications — such as licensure, if available in your state — or restrictions on facilities or programs used. Make sure you buy a policy that covers the types of facilities, programs and services you'll want and that are available where you live.

Nursing home

A facility that provides a full range of skilled health care, rehabilitation care, personal care and daily activities in a 24/7 setting. Find out whether the policy covers more than room and board.

Assisted living

A residence with apartment-style units that makes personal care and other individualized services available when needed.

Adult day care services

A program outside the home that provides health, social and other support services in a supervised setting for adults who need some degree of help during the day.

Home care

An agency or individual who performs services, such as bathing and grooming and help with chores and housework.

Home modification

Adaptations, such as installing ramps or grab bars to make your home safer and more accessible.