Long-Term Care Planning:
When is the right time to start?

When it comes to planning for a sound financial future, young professionals building a career have a lot to think about. It’s only natural to think of long-term care as something for your parents or grandparents. Nothing could be farther from the truth, and many people put off gaining an understanding of the topic until it is too late, which is like waiting for a hurricane to hit your city before devising a plan to protect your home and family.

What Is Long-Term Care?
Quite simply, long-term care refers to a broad range of medical and personal services that are provided over an extended period of time. Most people associate needing long-term care with aging or a cognitive impairment such as Alzheimer’s disease. But many younger people require long-term care services following accidents, such as motorcycle accidents or falling off the roof while cleaning gutters.

The mention of long-term care also generally brings to mind images of a nursing home. Again, this is a false impression, as most long-term care today takes place in the home or in a care center other than a skilled nursing care facility.

Who Pays for Long-Term Care?
Generally speaking, any health insurance you may have on an individual basis or through your employer only pays for doctor and hospital bills. As a result, most of the costs for long-term care are not covered by these plans. When you reach retirement age and qualify for Medicare, it’s also important to understand that Medicare pays little (if any) of the cost of long-term care.

So, who pays? Most often, it’s the individual receiving the care or his or her family members. Like medical expenses, long-term care can be costly, especially if you have to pay the entire cost from your own savings. Some thirty years ago, insurers began offering a form of protection called long-term care insurance designed to pay for qualifying care. Today, some eight million Americans—ranging in age from twenty to ninety—own long-term care insurance protection. That number grows yearly.

What Does Insurance Cost?
The cost of long-term care insurance is determined by certain factors. These include your age when applying for protection, the benefits that you are eligible to receive, and whether you opt for protection that pays for care in your own home.

The younger you are, the less long-term care insurance protection costs. While insurance premiums generally increase about nine percent each year that you wait to apply, the most important fact that younger people fail to recognize is that thier health must qualify for long-term care insurance. Your good health today can qualify you for significant yearly savings (similar to how good driving habits will reduce your car insurance). Perhaps more important, a negative change in your health—even one that is not life threatening—can cause you to pay as much as twenty percent more each year or make it impossible for you to qualify no matter how much you are willing to pay.

Long-term care insurance protection can be far more affordable than young people think. Leading insurance companies offer discounts to married couples that can reduce the cost by forty percent per year if both partners obtain coverage. An increasing number offer discounts for unmarried adults who are living together.

Some other ways to significantly reduce the cost include adding a deductible period (referred to as an Elimination Period in long-term care insurance protection) or choosing a limited benefit period (say one that pays benefits for three years versus one that provides unlimited coverage).

Can Insurance Be Tax Deductible?
The short answer is yes—especially if you own your own business. Recognizing that government programs do not adequately pay for long-term care insurance, federal and a growing number of state tax codes now offer tax incentives to encourage Americans to take personal responsibility for their future long-term care needs.

Business owners can deduct the cost of long-term care insurance protection for themselves, their spouse, and their tax dependents. Owners may be able to deduct one hundred percent of the cost and a knowledgeable long-term care insurance professional can tell you how to qualify.

Does Your Employer Offer LTC Protection?
More and more employers are offering long-term care insurance policies as an employee benefit. In many cases these policies offer outstanding benefits and affordable protection. Some employers will pay for a base level of insurance protection and allow employees to purchase additional levels at discounted rates. If your employer offers you a minimal level of long-term care protection at no cost, be certain to take advantage of this no-cost benefit.

Younger individuals who would qualify for good health discounts as well as spousal and partner discounts should compare policies offered by the employer with those available from an independent insurance professional. You may find you are able to obtain higher levels of protection for less cost.

Getting More Information
When you are ready to get prices for protection or determine if any existing health conditions will prevent you from obtaining insurance coverage, contact an experienced local long-term care insurance professional. The American Association for Long-Term Care Insurance maintains an online database of professionals in all communities (www.AALTCI.org). A professional will gladly answer your questions without any obligation.

Jesse Slome is Executive Director of the American Association for Long-Term Care Insurance, the national professional industry organization. For more information and a directory of area long-term care insurance specialists, visit their Website www.AALTCI.org.