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The Basics Of Long Term Care Insurance

BOSTON (CBS) - Have you thought about who will care for you in your old age?

In the movie Still Alice, she was going to need long term care at 51 because of early onset Alzheimer's. And her children stepped in to help keep her at home.

Long-term care is the care needed for individuals with chronic disabilities. This care could be in the individual's home or it may mean custodial care in a nursing home.

There are only 1.7 million nursing home beds (in 15,700) nursing homes). Seventy percent of the residents are relying on Medicaid to pay bills that average $80,000 a year.

According to the Census Bureau, only 4% of the 65 plus population occupy nursing homes at any given time. The odds are you will not need a nursing home, but if you are part of the 4%, how will you pay for your care?

The rate of nursing home use increases with age and almost 50% of those 95 and older live in nursing homes.

The cost of long-term care has been increasing over 4% a year. According to Genworth Financial the national average cost of a semi-private room in a nursing home is around $80,000 a year and it costs over $129,000 here in Massachusetts.

That's about $353 a day. If your income from your pension and Social Security is about $40,000 a year you will need insurance to provide you with a daily benefit of $243 a day.

The younger you are when you purchase the insurance the cheaper long-term care insurance will be. A 65-year-old couple in good health (you don't think they want to insure the sick people do you?) can purchase a policy with a 90-day waiting period, a 3 year benefit period, $125 a day benefit for either home care or nursing home care for under $5,000 a year.

Start with your employer to see if they offer LTC insurance in the form of a group policy. Get quotes from reputable insurance companies and compare the policies.

I got online with several different companies and the price varied as much as $500 for what appeared to be the same coverage. Two things will affect the cost of your premiums, your age and your health. The older you are the more expensive the policy.

Check out the office of Health and Human Services in Boston for more information.

One more thing:  The cost of LTC is a tax deduction if you itemize. The older you are the larger the deduction. It gets lumped in with your medical expenses. Medical expenses must exceed 10% of your income before you can use the deduction.

2015 Long Term Care Insurance Federal Tax Deductible Limits

Taxpayer's Age At End of Tax Year            Deductible Limit
40 or less  $  380
More than 40 but not more than 50  $  710
More than 50 but not more than 60 $1,430
More than 60 but not more than 70 $3,800
More than 70 $4,750


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