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Long-term care insurance helps cover the cost of a nursing home or (with some policies) services provided at home. Long-term care is gaining in popularity. We'll help you decide whether you should purchase a policy and how to shop for one, but it is important to first understand what we mean by long-term care (LTC).
Long-term care typically begins when you need help with one or more activities of daily living, usually as a result of an illness or disability (for example, a stroke or Alzheimer's disease). Activities of daily living (ADLs) are defined for LTC purposes as dressing, eating, bathing, walking, transferring between a bed and a chair, toileting, and maintaining continence. Along with assistance in ADL, you may require acute medical care, otherwise known as skilled nursing care, or intermediate nursing care, which requires some skilled nursing care combined with personal care.
But it is the long-term personal care, more commonly referred to as custodial care, that can be quite costly. While studies have shown that a majority of people will either never enter a nursing a home or will spend less than three months in one, many elderly people will need some daily assistance at home to care for themselves. This care may be provided by a home health aide or may require a skilled nurse, or a physical, occupational, or speech therapist.
For those who do enter a nursing home, the average length of stay is about two years. Contrary to popular belief, nursing home costs are not eligible for Medicare coverage unless certain qualifications are met.
Tax-qualified LTC insurance premiums (LTC premiums) are considered a medical expense. For an individual who itemizes tax deductions, medical expenses are deductible to the extent that they exceed 10% of the individual's Adjusted Gross Income (AGI) 7.5% for 2018. The amount of the LTC premium treated as a medical expense is limited to the eligible LTC premiums. That portion of the LTC premium that exceeds the eligible LTC premium is not included as a medical expense.
Individual taxpayers can treat premiums paid for tax-qualified LTC insurance for themselves, their spouse, or any tax dependents (such as parents), as a personal medical expense.
Securities and Investment Advisory Services are offered through LPL Financial, a Registered Investment Advisor, member FINRA/SIPC. Insurance products are offered through LPL Financial or its licensed affiliates. Heartland Planning Associates is a trade name of Heartland Bank. Heartland Bank and Heartland Planning Associates are not a registered broker/dealers and are not affiliated with LPL Financial. The investment products sold through LPL Financial are not insured Heartland Bank deposits and are not FDIC insured. These products are not obligations of Heartland Bank and are not endorsed, recommended or guaranteed by Heartland Bank or any other government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible. The LPL Financial representatives associated with this website may discuss and/or transact securities business only with residents of the following state: Ohio. Check the background of investment professionals associated with this site on FINRA's BrokerCheck.