New LTC Deductibility Levels

The IRS has set new deductibility limits for long term healthcare policies in 2008. If you itemize deductions you can claim a deduction for LTC premiums up to the following limits.

Age 2008 Deductible Limit

40 or less $310
40-50 $580
50-60 $1,150
60-70 $3,080
70 or older $3,850

Nursing Home Compare

You may at some time in your life be involved in selecting a Nursing Home facility for a loved one. The US Department of Health and Human Services Medicare site now has a feature called Nursing Home Care Compare. You can use this site to find and compare nursing homes by state, zip code, county or name. Once you have found nursing homes in your area you can view information on the quality of care provided. Each home is compared to the state and national averages for each category; for example the number of nursing staff hour per resident per day, or the percentage of residents who are physically restrained. Although the grading is measured against negatives and a little confusing (it seems a lower score is better), it is an excellent resource and a good place to start should you ever be in need of nursing home facilities.

Medicaid Rules and Gifts

With nursing homes care running north of $40,000 per year many families who have a "comfortable retirement" could find themselves facing the prospect of spending down a large chunk of their savings and investments should the need for nursing home care arise. Without long term care insurance some will find their only option may be to apply for Medicaid assistance.

While Medicaid rules vary from state to state, typically a person needing long term care benefits must spend down their assets to $2,000. If there is a surviving spouse they can usually keep the family home (but states can consider home equity in excess of $500,000) , a prepaid burial plan, and between $50,000 and $100,000 in resources.

Medicare rules are separate from and independent of tax rules. You may know that you can gift $12,000 per year to anyone you choose through the tax code, but did you know that a gift you made to your children within a five year period are considered assets that could disqualify you or your spouse for medicaid benefits?

If you or a family member are facing the prospect of nursing home care, and you do not have long term care insurance, you should quickly consult with an Elder care attorney, to help guide you through the complex set of rules for your state Medicaid system. But as they say an ounce of prevention is worth a pound of cure, so the prudent approach is to plan ahead time.

Shorter Long Term Healthcare Insurance?

A report from the American Association for Long-Term Care Insurance suggests that for the majority of policy owners, three years of coverage is sufficient. With high cost of coverage the primary reason for not having coverage this study suggests that some coverage is better than none, and for most is all that is needed.

There are a couple of caveats you should consider. The study only includes individuals who actually purchased LTC insurance. For those with no coverage what would be the length of coverage they should have purchased? Secondly, is the population that can afford LTC coverage healthier than the group that could not or did not purchase coverage thereby making their need for long-term care less than the total population?

My feeling is if you need LTC coverage (cannot afford to self insure) you should buy the most protection you can afford. Leaves you with one less thing to worry about, so you can get on with enjoying your life.

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