Long Term Care Insurance:The best Coverage for your Money

Here are some suggestions for the best coverage for your money when we talk about Long Term Care Insurance:

Elimination period/deductibles

• Avoid very low deductibles or elimination periods (EP), since lower deductibles have a much higher premium cost. Also, Medicare and a Medicare supplement policy may help defray the cost up to 100 days at the start of a long-term care (LTC) episode. That coverage often counts toward satisfying the elimination period.
• Recommend calendar-day EP over service-day EP.

Benefit length

• Avoid unlimited and very long benefit lengths. The best option is a 5-year policy.
• Concerning limited versus unlimited or lifetime coverage, based on buying at age 55, unlimited costs 40% more, on average, than 5 years of coverage.
• Over 90% of chronic LTC episodes will be fully covered by a policy offering 5 years of benefits.
• A 5year policy usually lasts longer than 5 years of use. The reason is that policies use the benefit pool or pot of money concept. The unused daily benefit is carried over for future use.
• If your client is very concerned about a 20-year Alzheimer’s episode, you can recommend longer coverage terms, shared care riders, higher daily benefits, or a state’s LTC Partnership program.

Other ways to prolong the life of the policy and/or reduce costs

• Shared care is often more cost effective than unlimited. But depending on the company, the additional cost can run from 10% to 22% for that rider. That is still less expensive than unlimited coverage.
• Use a higher daily benefit amount to expand the useful life of the policy
• Consider a state’s Partnership policy, especially in New York where unlimited asset protection is available.
• Avoid almost all other riders (i.e., survivorship, non-forfeiture, return of premium, etc.). They are expensive add-ons that may do nothing to enhance coverage.
• Encourage annual premium payment modes (especially at today’s interest rates).

The facts of a case will affect the analysis; I personally prefer a lifetime benefit length if there is a history of Alzheimer’s in the family, and particularly if the client is female. But it's good to recognize that benefits that are perfect for some may be less important to others.

Get a free quote : http://www.mintcofinancial.com/long-term-care-insurance-quote.asp


Or speak to our Specialist in Long Term Care Insurance: 1-888-MINTCO-8

Financial Planning for Women

Unfortunately, women’s strengths don’t erase the challenges they may face when it comes to money. 

Mothers and caregivers often have to take lengthy leaves from their careers to care for kids or aging parents, lowering their contributions to employer-sponsored retirement plans and costing them years of the company match. 

Living longer, they may outlast their funds or spend more time ill. They may also err too far toward risk avoidance. As a result, they need strategies that complement the strengths noted above and offset several distinctive problems:

Start early. To reap the rewards of their patience, women should plan ahead and accumulate enough cash to invest. That means maximizing contributions to a 401(k) early. 

Even a small monthly amount, done early and steadily, makes an extraordinary impact a lifetime later. Unfortunately, studies show that most don’t start saving early enough. In other words, it’s very important to have a conversation with your Financial Advisor early.

Don’t be too risk averse. While their prudent, well-informed approach can help protect women from losses, being too cautious can prevent women from achieving the growth they need. One study showed women leaving 20% of their assets in checking accounts.11 They can also often be too busy balancing family and career to take time to rebalance their portfolios or review their assets. Insufficient diversification — leaning on CDs, shunning equities and relying too heavily on less risky bonds — may limit the potential to generate sufficient income from a portfolio and allow inflation to reduce the portfolio’s purchasing power over time (and, given women’s longer life spans, the long term is critical). Over the long term, shunning stocks in favor of bonds can mean a portfolio isn’t properly diversified and so may not combat the eroding power of inflation.

Offset your challenges. Shifting into part-time or flextime work to be caregivers can result in missed opportunities to save and lower Social

Security benefits. But there are smart, preventive steps to take. Setting up tax-advantaged retirement accounts and adding to them yearly, regardless of work status, can make a significant difference. Part-time workers can open and fund individual retirement arrangements (IRAs); the self-employed can take advantage of Simplified Employee Pension (SEP) IRAs. Married women with no income may be eligible for a spousal IRA, set up and funded by their partner. It’s often sensible, after leaving a company, to roll over 401(k) funds to a rollover IRA, which makes asset management easier and generally offers broader investment choices.

Finally, for women whose current employment puts them in a lower tax bracket, converting regular IRAs to Roth IRAs could make sense. Roth IRAs are taxed now (not later) and have the potential to grow tax-free. Qualified withdrawals during retirement are tax-free. You should consult your tax advisor before making these decisions.

Be prepared. Women’s admirable sense of realism is not all-encompassing: They can fail to factor the cost of a longer life into their financial strategy. The Social Security Administration says U.S. women outlive men by five to seven years; those reaching 65 can expect to live an additional 20 years.12 Living longer means potential for increased medical costs: The Employee Benefits Research Institute says a woman retiree of 65 may need $242,000 in savings for health care, insurance and other health expenses (if she has no company, military or union plan).13

It’s a common misconception that health insurance and Medicare will pay for assisted living or a nursing home, but that’s usually not the case. That makes it important for all investors, especially women, to consider whether long-term care insurance might make sense. Studies show that most women hope to pursue travel, hobbies, philanthropy and generational bequests,14 and having savings in place frees them to do so. They should also consider guaranteed-income insurance products such as annuities, which involve paying a premium in a lump sum or installments in exchange for a guaranteed income stream in retirement. And they should defer taking Social Security payments as long as possible, since deferring increases the payment. Finally, they should explore, if a spouse has a pension, adding survivor benefits to the policy.

There’s little doubt that women’s financial behavior and preferences across situations show major differences from men’s. Women’s financial strengths are significant, but so too are their challenges. In the end, this type of careful and informed approach to investing and saving, when coupled with early planning and forethought, can offer a powerful example that all of us could use to better control our financial destiny.

www.MintcoFinancial.com 

Tax Treatment of Long Term Care Insurance

Tax Treatment of Long Term Care Insurance

There are numerous compelling reasons  to consider the purchase of long term care insurance.  Although the distinct tax benefits of these policies is not the most significant of these, a discussion of potential tax advantages may serve as a motivational tool.  I'll outline the key tax implications of long term care insurance policies – but of course - you should consult with your own tax advisors.

TAX IMPLICATIONS OF TAX QUALIFIED POLICIES:

In general there are two types of long term care policies that are available- tax qualified policies (TQ) and non tax qualified plans.  Although the IRS has not ruled definitively on the taxability of benefits received from a non tax qualified policy, they have definitely determined the preferential treatment of tax qualified LTCI policies. 

Most, but not all, of the plans being offered by insurance companies today are TQ policies. 

There are differences that should be noted between the two types of plans:

Non-Tax Qualified policies.  The contract wording of non-tax qualified policies is generally a bit more liberal than the TQ plans.  With a non TQ policy, benefits may be paid when any one of three triggers happens:

·      Care is medically necessary, or

·      Inability to perform 2 of 6 activities of daily living, or

·      Cognitive impairment

Tax Qualified Policies.  With the Tax Qualified policies, the first trigger (medically necessary care) is eliminated.  In addition, a health care professional must certify that the care is likely to last 90 days (i.e. it is truly long term care);  in addition, the wording of the two triggers is a bit more stringent (although somewhat unclear)

·        Need for SUBSTANTIAL assistance with 2 of 6 activities of daily living, or

·        Require SUBSTANTIAL supervision due to presence of SEVERE cognitive impairment

The Health Portability and Accountability Act of 1996 enabled the IRS to treat TQ long term care insurance policies like accident and health insurance and are treated as a deductible medical expense under Code Section 213(d).  

Medical expenses are currently limited to the excess over 7.5% of a taxpayer's adjusted gross income. (IRC sec. 213 (a) ). 

Qualified LTCI premiums are premiums that do not exceed the age-based limits established by the IRS as listed below.  These limits are adjusted annually for inflation.

Eligible Long Term Care Insurance Premiums

Age attained before                      2007 Maximum Deduction

Close of Tax Year                        Per Individual

40 or less                                         $   290

41-50                                               $   550

51-60                                               $1,110

61-70                                               $2,950

71 and older                                     $3,680

Many states offer tax credit or an income tax deduction for LTCI premiums paid.

In addition, long term care benefits are received tax-free up to $260 per day in 2007 (IRC sec. 7702B(d) ) and may be tax free for more than that if the actual expenses exceed that amount.

Self-employed

A self-employed individual may deduct 100% of the eligible premium for a qualified LTCI policy as an above-the-line business expense if:

·        The business pays the premium, and

·        The individual is not covered by a LTCI policy maintained by the individual's or spouse's employer (whether or not the individual or spouse actually participates).

Corporations, Professional Corporations and  Profit Organizations

C Corporations may deduct all premiums for tax-qualified LTCI for its employees, their spouses, and eligible dependents (IRC sec. 152). 

Even premiums in excess of the age-based limits described above are deductible. 

A plan may be selective, covering one or more employees/spouses and there may be different plans for different employees or classes of employees/spouses.

Partnership and limited liability coMPANIES

Generally, a partnership or LLC may deduct all premiums it pays for LTCI for its employees, their spouses and eligible dependents (IRC sec. 152 and 162).  

The premium is not included in the employee's income.  

The partnership may pay the premiums for partners. 

As long as the LTCI premiums are paid without regard to partnership income, they will be considered "guaranteed" payments under IRC sec. 707(c).  

Therefore, they will be deductible by the partnership and includable in the partners' incomes.  

The partners are then treated by the IRS as self-employed persons and follow the guidelines for self-employed persons with LTCI.

 

S Corporations

The tax treatment for S Corporations depends upon whether or not the participating employee owns more or less than 2% interest in the S Corporation. 

If the participating employee does not own more than 2% interest on any day during the tax year, the entire TQ LTCI premium for the employee, spouse and dependents is deductible by the business as long as the premium is paid by the business.

The premium is not included in the employee's income.

If the participating employee does own more than 2% interest in the S Corporation, the employee is treated like a partner of a partnership, i.e. premiums are deductible by the corporation and included in the employee's income.  The employee is then treated by the IRS as a self-employed person and follows the guidelines for a self-employed person with LTCI.

 

Contributory arrangements

If an employer and employee split the cost of a long term care insurance policy, the employer receives the same federal income tax treatment on the portion of the LTCI premium it pays that it does on the entire premium in a situation where the employer pays the entire premium.

Health Savings Accounts and Long Term Care Insurance

The Medicare Act of 2003 which enables individuals to create HSAs , allows contributions to an HSA to be made on a pre-tax basis. 

In addition, withdrawals for qualified medical expenses are made tax-free. 

TQ LTCI premiums are a qualified medical expense (IRS Notice 2004-50, Q and A 41).  As such, an individual may withdraw money tax-free from their HSA to pay TQ LTCI premiums (with the age-based limitations listed above).

CONCLUSION:

There are significant reasons why you should consider long-term care coverage – and many distinctive tax advantages associated with the purchase and utilization of long term care insurance.  Ask your advisor the pros and cons of long-term care coverage and when it can provide an appropriate  measure of protection for hard earned assets.

 In some situations it may be wise for children to pay premiums on such coverage for their parents – particularly if the burden would be shifted to the children in the event care is needed but not affordable by their parents. 

Questions??? Call us at 716-565-1300

www.MintcoFinancial.com

Long Term Care Resources (LTCR) is a national insurance agency and marketing company dedicated to Long Term Care Insurance and the senior market.  LTCR represents the top LTC insurance companies in the industry including:

• Prudential Life Insurance Company


• John Hancock Life Insurance Company


• Genworth Financial


• Mutual of Omaha

LTCR is one of the leading independent LTC distributors in the country.  LTCR specializes in marketing LTC insurance through partnering with organizations such as professional associations, alumni groups, and small businesses.  LTCR is the endorsed LTC provider for over 400 affinity organizations.  LTCR helps millions of members nationwide including:

• The American Medical Association


• The American Bar Association


• The National Society of Professional Engineers


• The American Nurses Association


• 175 Alumni Organizations


• And too many others to list

Through LTCR's marketing programs and our national network of LTC Specialists,  clients are able to compare multiple LTC plans from the top carriers in the LTC market.  In addition, our clients are able to obtain certain plans at discounted rates not available to the general public.

If you are interested in LTC coverage for yourself or a family member, please contact us at

http://www.mintcofinancial.com/contactus.asp 

or call us at 716-565-1300

We will be glad to assist you!

Life insurance and Long term care insurance combined

Combine life insurance with long-term care protection to preserve your assets.

Purchase a whole life insurance, with a rider to the policy which pays for long-term care ( home care or care in an assisted living or nursing home). If you do not utilize the long term care benefit, your beneficiary will receive the policy’s face amount.

Example. You apply for a $500,000 whole-life insurance policy, with a rider for long-term care that will pay you 2% of the face amount each month if you need long-term care services. Therefore, you will receive up to $10,000 monthly ($500,000 x 2%) to pay for home-care, assisted living, or nursing home services. Consequently, if you utilize $200,000 for long-term care, your beneficiary will receive the balance $300,000 when you die.  Additionally, you can save a certain amount of assets if you enter the nursing home.

Please also check more information and cost of the Life Insurance and Long Term care Insurance Combined: http://www.mintcofinancial.com/files/pdfs/Nationwide%20Life%20Insurance%20LTC%20rider.pdf

Mintco Financial has helped over a thousand of people to apply for Long Term Care Insurance and protect their assets.


 Contact Michael Minter at 716-565-1300 or visit the website www.MintcoFinancial.com

Is Long Term Care Insurance for me?

You’ve done a good job saving for retirement. You’ve got your living expenses covered, with something left over for some travel and fun.
Just one thing: Did you remember to plan for long-term care? It’s no fun to talk about, but the unfortunate truth is that many of us will have a need for long-term care sometime in our lives.
But still no one wants to talk about it. You have to make a decision as soon as possible. Because the more you delay, the more expensive it can be...or maybe you even can not apply anymore due to health problems.
Other question you have to ask yourself :

Can you count on a family member when that need could be many years down the road? Do you really want to put this issue over the shoulders of your loved ones? They do have their own lives and problems. You should not count on them.

You could self-fund your care if you’re sufficiently wealthy—but do you want to allocate a substantial portion of your retirement assets to pay for long term care, when that money could be earning a return and funding retirement for your spouse when you’re no longer around? 

If you do decide to buy a policy, it’s important to shop carefully and get good advice. Insurance companies can’t cancel long-term care policies and can’t change the terms—but neither can you. 


For a free quote send us an e-mail to anecamara@mintcofinancial.com

with the answers  for the questions below:

Do you own assets worth over $75,000? (Do not include your home or car.)
Age:
Do you expect to have annual retirement income over $30,000 individually, or over $50,000 including your spouse?

We will provide you a free quote from the Top Insurance Companies such as Genworth & John Hancock.

www.MintcoFinancial.com