With the average American Baby Boomer reaching retirement age, long-term care should be on the minds of many people today. As we Boomers age, it is likely that we will need:
- Assistance with daily activities such as bathing, eating, dressing;
- Skilled nursing care or rehabilitation training either in a nursing facility or at home; or
- Care related to cognitive impairment such as Alzheimer’s Disease.
Long-term care insurance offers a means to offset the long-term care costs that are not covered by a traditional health insurance policy or by Medicare. This coverage potentially preserves assets for loved ones rather than having them used for your medical expenses.
Generally, long-term care insurance contracts are treated as accident and health insurance contracts for income tax purposes. Additionally, amounts you receive from them, other than policyholder dividends or premium refunds, are excludable from income as amounts received for personal injury or sickness. Premiums paid for a qualified long-term care insurance contract are a medical expense, but the deductible amount of the premium is limited by the individual’s age at the end of the tax year. The inflation-adjusted maximum deductible amounts for 2011 through 2013 are:
|
Age
|
2011
|
2012
|
2013
|
|
Age 40 or younger:
|
$340
|
$350
|
$360
|
|
Age 41 through 50:
|
$640
|
$660
|
$680
|
|
Age 51 through 60:
|
$1,270
|
$1,310
|
$1,360
|
|
Age 61 through 70:
|
$3,390
|
$3,500
|
$3,640
|
|
Age 71 or older:
|
$4,240
|
$4,370
|
$4,550
|
Long-term care insurance does not make sense for everyone. However, it should be considered by those who have assets, such as investments or property, that they do not wish to consume, and those who have the ability to make premium payments for the policy. In reviewing your financial goals, it might be beneficial for you to evaluate whether such insurance should be a part of your overall financial and retirement planning. If you would like any further information regarding this issue as well as any other tax related issue, contact Henssler Financial at 770-429-9166 or experts@henssler.com.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
