Long-Term Care Insurance: A Key Consideration for Estate Planning
Posted by D’Marie Kleeman on October 31, 2024
According to the U.S. Department of Health and Human Services, about 70% of Americans over 65 will need long-term care (LTC) at some point. Without a plan, these costs can drain retirement savings intended for family or future needs, making LTC insurance a practical safeguard.
What Does LTC Insurance Cover?
LTC insurance helps cover costs for services like nursing home care, home health aides, and assisted living. Policies typically specify daily or monthly benefits and lifetime maximums, with coverage depending on care type. Most policies activate once you’re unable to perform basic activities like bathing, dressing, or eating. After a waiting period (usually 90 days), you receive benefits, and premiums stop. Keep in mind that coverage may be limited due to preexisting conditions.
Factors to Consider Before Buying
Unlike other insurance types, you usually only have one good opportunity to buy LTC insurance. Before committing, consider these factors:
- Financial Standing: Evaluate whether you can afford LTC costs without compromising other financial goals.
- Estate Planning Goals: If preserving wealth for your family is a priority, LTC insurance may align well with your estate plan.
- Age and Health: The cost of premiums increases with age, and certain health conditions may raise rates or disqualify you. Applying sooner can yield more affordable rates and flexible options.
Employer-sponsored or group policies might also offer more affordable coverage, especially if health issues could affect eligibility for private policies.
Reviewing Your Options
Determining whether LTC insurance fits your needs involves comparing policy costs, benefits, and tax implications. Consult with your advisor to explore your options and decide on the best path to protect your financial future and estate.
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D’Marie is a tax principal with experience in all areas of U.S. Federal and New York State taxation. While specializing in performing tax services for individuals, trusts, and estates, she also provides tax services to commercial businesses, real estate-related businesses, privately held businesses, and private foundations.