People are living longer and longer these days. That is good news, but the flip side of that is there are more years in which there is a risk of serious health problems. And that could literally cost all of your remaining life's savings. Unfortunately, ordinary health insurance policies and Medicare usually do not pay for long-term care expenses. Medicaid, a federal/state health insurance program, will only pay for long-term care if you've already spent most of your savings or other assets. So, there's long-term care insurance.

Long-term care insurance typically covers the cost of:

• Help in your home with daily activities like bathing, dressing, eating and cleaning.
• Community programs, such as adult day care.
• Assisted living services that are provided in a special residential setting other than your own home. These services may include meals, health monitoring, and help with daily activities.
• Visiting nurses.
• Care in a nursing home.

Other benefits of long-term care insurance:

• Many individuals may feel uncomfortable relying on their children or family members for support, and find that long-term care insurance could help cover out-of-pocket expenses. Without long-term care insurance, the cost of providing these services may quickly deplete the savings of the individual and/or their family.
• Premiums paid on a long-term care insurance product may be eligible for an income tax deduction. The amount of the deduction depends on the age of the covered person. Benefits paid from a long-term care contract are generally excluded from income.
• Business deductions of premiums are determined by the type of business. Generally corporations paying premiums for an employee are 100% deductible if not included in employee's taxable income.^{[IRS Sec. 162(10)(1)(B)]}

When is the right time to buy a policy?

Many people don't think about long-term care until they get into their 70s and 80s and their health begins to fail. The best time to buy long-term care insurance may be middle-age. It's the time when you have the highest likelihood of being eligible for a policy and, just as important, when premiums costs might be lower.

Key Issues to Review

Be sure you consider each of these issues:

• Coverage. You can choose long-term care policies that pay only for nursing home care, or only for home care. Or, you can opt to purchase coverage for a mixture of care options that includes nursing home, assisted living, and adult day care. Some will pay for a family member or friend to care for you in your home.
• Daily or Monthly Benefit. The daily or monthly benefit is the amount of money the insurance company will pay for each day or month you are covered by a long-term care policy. If the cost of care is more than your daily or monthly benefit, you will need to pay the balance out of your own pocket.
• Benefit Period. Your benefit period determines the length of time you will receive benefits from your policy. You can choose a benefit period that spans from two to six years, or the rest of your life.
• Elimination or Waiting Period. During this period, you must pay all of your long-term care expenses out of your own pocket. This period could last anywhere from 0 to 100 days. The longer the waiting period is, the lower your premiums will be.
• Inflation Protection. With health care costs rising to new heights every year, buying a policy without inflation protection is probably buying a policy that won't cover much of your expenses. There are two main kinds of inflation protection: the right to add coverage at a later date; and automatic coverage increases.
• Non-Forfeiture Benefit. Policies with this benefit will continue to pay for your care even if you stop paying premiums. This policy feature can add 10 percent to 100 percent to your premium.

Important Features to Consider

Make sure that your long-term care policy:

• Clearly explains when you will be eligible for coverage and how your eligibility will be determined.
• Does not require that you spend time in a hospital before receiving benefits.
• Will be renewed as long as you pay the premiums.
• Lets you stop paying premiums once you begin receiving benefits.
• Has one deductible for the life of the policy.
• Automatically covers pre-existing conditions if you disclosed them when you applied.
• Offers choices for inflation protection including an automatic increase in your benefit on an annual basis or a guaranteed right to increase your benefit.
• Allows you to downgrade your coverage if you cannot afford the premiums.
• Includes coverage for dementia.
• Provides at least one year of nursing care and home health care coverage.
• Allows the right to cancel the policy for any reason with 30 days of purchase and receive a refund.

Long-Term Care insurance can be confusing. The following links from National Association of Insurance Commisssioners (NAIC) may be helpful as you consider your options.

Understanding Long-Term Care [PDF]

Long-Term Care Insurance: What You Should Know

If you're concerned about being financially secure during your retirement years, you owe it to yourself and your loved ones to protect yourself against what could be the greatest threat to your financial security, the cost of long-term care. For more information or to get a quote, please     to fill out our online Long-Term Care quote form.