Long Term Care Insurance Premiums
How much are long term care insurance premiums? Long term care insurance is something that most people don’t begin to consider until they are way past retirement. Did you know that most experts recommend people begin to think about and purchase long term care insurance around the age of 40? Believe it or not, this is the most cost efficient age to purchase a long term care insurance policy at.
As you age, your long term care insurance rates will increase. Long term care insurance is best purchased at a younger age when the premiums will be most affordable and when you will get the most for your money.
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Long Term Care Insurance Policies
Long term care insurance will help pay for long term care expenses that are needed for people who can longer perform basic daily living activities alone such as eating, bathing and dressing.
While most long term care insurance policies won’t cover 100% of your long term care costs there are some great options available through long term health care insurance.
Indemnity LTC Insurance Policies: This types of LTC insurance policy will pay up to a fixed amount no matter what you actually spend.
Expense Incurred LTC Insurance Policies: You choose a benefit amount when you purchase the policy, and you will be refunded for long term care expenses up to the benefit amount on a daily, weekly or monthly basis.
Tax Deductability of Long Term Care Insurance Premiums
Are long term care insurance premiums tax deductible? Well, the answer is "It depends". There are 2 types of long term care insurance policies: qualified and non-qualified. Premiums paid for qualified long term care insurance policies receive special tax treatment and must adhere to special criteria that is set in place by the National Association of Insurance Commissioners (NAIC).
To deduct long term care insurance premiums you must first make sure that your policy is a qualified policy (or was purchased before 1/1/97 an grandfathered in as a qualified policy) and then you must consult the long term care insurance premium deductability limits that are published and updated annually by the IRS. The process for deducting long term care insurance premiums paid is very straightforward. After checking to make sure that your policy is a qualified policy, consulting the IRS long term care insurance premium limits table, then you simply enter that amount in with your other medical expenses to be deducted as an itemized deduction to the extent that they exceed your Adjusted Gross Income (AGI). Note, that the long term care insurance premium deduction is only advantageous to you if you itemize.
This advice is general in nature and not intended to be tax or financial planning advice. You should consult the services of a CPA or other qualified tax advisor before you make any tax decisions regarding your long term care insurance policy.
What Effects The Cost Of My Long Term Care Insurance Premiums?
Once you purchase your long term care insurance policy your premiums generally won’t increase. If they do increase, it is due to an increase for the entire class of policy holders and not due to your age, your health, etc.
The main factors that determine your long term health care insurance premiums when you purchase your policy include:
Age: Your age when you purchase the policy will be a huge determining factor in your LTC insurance premiums. The younger you are, the lower your premiums will be. It is most cost effective to purchase your long term care insurance policy around the age of 40. While you will be paying the premiums longer because you are so young, it will still be less overall than purchasing the policy when you are older.
Benefits: The amount of the benefits and the length of the benefits that you choose when you purchase your policy will also affect your premiums. The higher and longer the benefits you choose, the higher your premium will be.
Deductible Periods: A deductible period or elimination period is the amount of time that you receive the long term care before your policy benefits kick in. For example, you can usually choose to have a deductible period form zero to 180 days. So if you choose a deductible period of 50 days, then on your 51st day in the nursing home your policy will start paying you benefits. The longer the elimination or deductible period is on your policy, the lower your long term care insurance premiums will be.
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