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Long-Term Care Insurance

What is long-term care insurance?

Long-term care insurance is designed to cover a wide range of long-term care services. If you are unable to care for yourself because of a prolonged illness or disability, long-term care insurance may pay for the kind of services you need. Such services may include help with activities of daily living, home health care, respite care, adult day care, care in a nursing home or care in an assisted living facility.

Some long-term care insurance policies qualify for a deduction on both your state and federal income tax returns. You may be able to deduct your premiums from your income taxes in the same way medical expenses are deducted. For more information or to see if a tax-qualified or non-tax-qualified long-term care policy best meets your needs, contact one or more of the following:

  • Your insurance agent or company
  • Your tax consultant
  • The Internal Revenue Service

Do you need long-term care insurance?

Whether you should buy long-term care insurance will depend on your age, health status, overall retirement goals, income and assets. For instance, if your only source of income is a Social Security Benefit or Supplemental Security Income, you probably should not buy long-term care insurance since you may not be able to afford the premium.

On the other hand, if you have a large amount of assets but do not want to use them to pay for long-term care, you may want to buy a long-term care insurance policy. Many people buy a policy because they want to stay independent of government aid or the help of family. They do not want to burden anyone with having to care for them. However, you should not buy a policy if you cannot afford the premium or are not sure you can pay the premium for the rest of your life.

Is long-term care insurance right for you?

You should NOT buy long-term care insurance if:

  • You cannot afford the premiums.
  • You have limited assets.
  • Your only source of income is a Social Security benefit of Supplemental Security Income (SSI).
  • You often have trouble paying for utilities, food, medicine, or other important needs.
  • You are on Medicaid.

You should CONSIDER buying long-term care insurance if:

  • You have significant assets and income.
  • You want to protect some of your assets and income.
  • You can pay premiums, including possible premium increases, without financial difficulty.
  • You want to stay independent of the support of others.
  • You want to have the flexibility of choosing care in the setting you prefer or will be most comfortable in.

How do you purchase long-term care insurance?

There are several avenues to pursue in the long-term care insurance market:

  • Individual policies - Most long-term care insurance policies are sold to individuals by insurance agents. Individual policies can be very different from one company to the next. Each company may also offer policies with different combinations of benefits. Be sure to comparison shop among policies, companies and agents to find the coverage that best fits your needs. Be sure to ask companies whether they have increased the rates on their long-term care insurance policies. Call and check with the Idaho Department of Insurance to confirm that the insurance company is licensed to do business in Idaho. You may also want to check the financial stability of the company by checking it's ratings. You can get some ratings by asking the Idaho Department of Insurance for them, or you can check some insurer rating services for free at most public libraries.
  • Employee policies - Your employer may offer a group long-term care insurance plan. The employer group plan may be similar to what you could buy in an individual policy. One advantage of an employer-group plan is you may not have to meet any medical requirements to get a policy.
  • Association policies - Many associations let insurance companies and agents offer long-term care insurance to their members. These policies are like other types of long-term care insurance. As with employer group policies, association policies usually give their members a choice of benefits options. Policies sold through associations usually let members keep their coverage after leaving the association. Be careful about joining an association just to buy insurance coverage. Review your rights if the policy is terminated or canceled.
  • Life insurance policies - Some life insurance policies offer long-term care benefits as part of the policy or as a rider to the policy. Benefits may be incidental to the life insurance coverage, and may not be as inclusive as they are under a separate long-term care policy. Be sure to compare the benefits and premiums before you decide if a life insurance policy is how you want to purchase long-term care insurance.

For additional information, order "A Shoppers Guide to Long-Term Care Insurance".