ARTICLE | February 13, 2025

As individuals look to secure their financial well-being in the face of life’s uncertainties, the concept of longterm care insurance has gained prominence. With the potential to provide vital support during times of illness or incapacitation, long-term care insurance has become a critical consideration for people of all ages.

When Should People Start Considering Long-Term Care Insurance?

The ideal time to consider purchasing long-term care insurance is typically in your 50s or early 60s when premiums are more affordable, health conditions are likely to be better, and more options are available.

Why Purchase Long-Term Care Insurance?

• Protecting Assets: This is one of the primary reasons. The costs of care, whether at home or in a facility, can be exorbitant and quickly deplete savings. Current care can cost upwards of $10,000 per month and needed for an average of 60 months.

• Maintaining Independence: Long-term care insurance often covers home care services, promoting independence and a higher quality of life.

• Relieving Family Burden: Long-term care needs place a significant burden on family members. Insurance can alleviate the emotional and financial strain on loved ones by hiring professional caregivers.

Who Should Purchase Long-Term Care Insurance?

As a rule of thumb, individuals under the age of 65 with $1.5 million to $3 million in investable assets should purchase coverage. Individuals with assets under $1.5 million aren’t likely to see the benefit of coverage compared to what they receive, while those with assets in excess of $3 million are likely able to self-insure.

What Type of Policies Exist?

• Term Policies: These offer coverage for a limited time. Premiums may be affordable for someone in their 40s, but benefits are likely to go unused, and the cost increases as the policyholder ages.

• Asset-Based or Hybrid Policies: These pair long-term care benefits with life insurance. If policyholders don’t tap into the long-term care benefits, heirs will receive a death benefit upon the policyholder’s passing.

Are There Alternative Options?

• Washington State: Individuals paying into the state’s long-term care program may be eligible for benefits, currently capped at $35,000. Since not all of the expenses associated with long-term care may be covered, adding private long-term care insurance would help bridge this gap.

• Medicare: Medicare does not cover most long-term care costs, leaving individuals without supplemental health insurance or a long-term care policy to carry these financial burdens.

What Are The Tax Implications of Long-Term Care Premiums and Policies?

Premiums are deductible but limited based on the policy holder’s age. Self-employed individuals deduct these premiums just as they would individual or group health insurance premiums. Otherwise premiums are medical expenses reported on Schedule A, Itemized Deductions. Benefits are never taxable unless reimbursements exceed expenses.

*Important Disclosures: This article was originally written Nov 2023 and contains general information and opinions and is only a summary of
certain issues and events that we believe might be of interest generally. Nothing in this article is intended to provide, and you should not rely on it
for, accounting, legal, tax, insurance or investment advice or recommendations. For questions or assistance, please contact Jaemi Allen at
Larson Gross at 800-447-0177.