A big value in buying Long Term Care insurance - you will not burden family members.

Why is this special kind of long term health insurance so important?

The Parker Agency likes to think of this special insurance as "key" family protection©. Why?

• It answers the question - Who is going to help when I can't do everything for myself?
• How? When on going assistance is needed funds are available to pay for professional help.

A family member will normally continue to be the coordinating care giver but having help means they will not be faced with the emotional, financial, and physical burden of being a full time care giver. In other words family and loved ones will be able to help as they can and care about you - but not have to care for you 100% of the time.

Having funds to pay for professional help means:

• People have control over where needed assistance is received and thus can maintain as much independence as possible and retain their dignity.
• Their nest egg will not have to be used up to pay for help.
• There will not be conflict in the family over spending for the care of one parent vs maintaining retirement funds for the other

Note: Studies indicate individuals with this special insurance receive an average of 14 more hours of personal assistance than those without insurance.

How does Long Term Care insurance (LTCi) work?

The main parts of this important coverage include:

One - The amount of coverage. Usually you select a daily amount but the option for a monthly benefit gives more flexibility since services can vary day to day.

Two - How long will benefits be provided.
Note: Lots of thinking needs to go into selecting the - 'how long' or the number of years to buy. Some people have just needed assistance for 2 or 3 years. On the other hand a significant "Life Happens" situation tomorrow, or mobility problems because of frailty could require help for a much longer period.
Bottom line – no way to predict how long coverage would be needed.

Three - When will benefits begin. This is best described as a waiting period. It is the number of days, after your need for help is certified, before benefits begin to be paid. A plan where benefits begin after a 30 day waiting period could be 10% to 15% more expensive than one that starts after 90 days.

Four - When the amount of coverage and the 'how long' are multiplied the result is the plan's initial benefit amount. Since these benefits may not be used for years the most important part of your Long Term Care insurance plan is the inflation protection option, or how will the initial benefit amount grow. Adding the Benefit Increase coverage creates, over time, a significant pool of funds thus it's vital even though it can more than double the plan's cost. It would be nice to have 100% coverage. However, since Long Term Care services are very expensive and the probability of needing assistance is high the premium for a 100% benefit would be significant. The Parker Agency recommends thinking about developing a Long Term Care insurance plan where expenses in the above Amount, How Long, and How Soon parts are shared. This is a way to meet your interest and to have a premium, which fits your budget.

Another way to think about this special protection is that it works like disability insurance. But instead of providing money to replace income this special long term health insurance pays for the on going help needed.

Is there a tax deduction if I buy LTCi?

Yes! IRS regulations say the following age based amounts, for a tax qualified Long Term Care insurance plan, can be deducted as a medical expense when completing the 2008 IRS 1040: - age 40 and under = $310 - 41 through 50 = $580 - 51 through 60 = $1,150 - 61 through 70 = $3,080 - 71 and older = $3,850. These amounts are adjusted higher each year. Some other points about the IRS Long Term Care regulations:

• For Individuals: The allowable amount is added to other unreimbursed medical related expenses and any amount greater than 7.5% of adjusted gross income can then be deducted.
• Business owners operating as a Sole Proprietor, a Partnership, or in an LLC have more flexibility: The full premium can be taken as a business expense. However, premium amounts above the age based schedule generally become taxable income to the covered business owner.
• Incorporated businesses: The entire premium is a business expense and there is no taxable income to the employee when the premium is paid or when benefits are received.
• A special advantage for any business, which gives LTCi more flexibility than health insurance - the organization can be selective with whom they buy coverage.

Are there other reason for "key" family protection©?

1. Buying when younger results in a lower premium and means you have a protective wall in case of an early "Life Happens" situation.
2. It's much better than relying on government provided care. Why? Continuing state and federal budget problems have resulted in reimbursement rates being 50% or more below the cost of providing care. This in turn raises the question - Do you and your family really want to make plans to qualify for the kind of lifestyle that comes with being on welfare?. (More information on how government care works.)

Bottom line - it is normal to think nothing will happen to your health and no one can say it won't. However, we can't predict tomorrow thus the saying - Life is what happens when you are making other plans really emphasizes the importance of this special kind of 'long term' health insurance. Thus, it's so important to plan and buy this protection early in case it does!

More information can be found on:

Long term care services and their costs - see the What's LTCi page.

The importance of early planning - see the Value of Early Planning page.

Connecticut employers - some points to help understand the value in having Long Term Care insurance as an employee benefit is on the LTCi in the Workplace page.

Want to talk about all this? Call John C Parker [860.739.0005] Its important to set up a plan so you won't burden family and can protect your nest egg.