Age and Medical Condition
Your age and medical condition are a factor, just like life insurance. It will cost you less money to get a long-term care insurance plan when you are young and healthy. Many long-term care insurance policies will not cover pre-existing conditions. If you do get one that does, the insurance provider may put a clause that will not cover any care needed due to the condition for a specified time period.
If you are older with a medical condition and you are attempting to obtain long-term care insurance, you most likely will be denied.
Income Level
Long-term care insurance, like other forms of insurance, costs money. You will pay monthly premiums and they can reach into the thousands per year. Your income level needs to be a factor when looking for coverage.
If you have problems paying your bills, then long-term care insurance might not be for you. As you age, your income producing assets decline. Most people make less money after they reach retirement.
Your income level at the time of needed care might also allow you to qualify for Medicare. If you feel that your income level is going to be near the Medicare qualification, then long-term care insurance might not be for you. It can be difficult to get the medicare, as you have to exhaust all other avenues before qualifying. Medicare doesn’t cover all aspects of what a long-term care insurance plan might. Nursing home stays are typically covered, but at-home care will be limited. These aspects of Medicare should be considered.
Taxation
One aspect that is often forgotten with long-term care insurance is how the benefits will be taxed. Most people don’t think about it. Luckily, the benefits received from a policy are generally not taxed as income. Along with that, the premium values can be tax deductible if you meet certain standards. Generally, you have to itemize your deductions and you would need to have medical costs that exceed 7.5% of your adjusted gross income (AGI). This deduction on your federal income taxes and some states provide some type of deduction or credit as well. The amount depends on your age.
There are many factors to consider if long-term care insurance will be right for you. The numbers show that a majority of people over 65 will need it. There are different policies available, so talking with your insurance agent would be beneficial. Although long-term care might be a scary thought, you should consider the pros and cons of the coverage.
Readers: Have you thought about long-term care planning? Do you feel you will be prepared to pay for medical and long-term care expenses in retirement?
