Before I get into discussing the pros and cons of long-term care insurance, let’s talk about the weather… yeap… the weather.
Warm and sunny temps marked the holiday season for most of the US in 2021, ruining visions of a white Christmas. Now, at the beginning of 2022, cold snaps are hitting places people normally escape to for some sand and sunshine.
Take Florida. Temps dropped to near freezing over the weekend for places like West Palm Beach and Tampa Bay, surprising some native residents: unsuspecting iguanas. The cold froze them in place making them nosedive from their tree perches to the frosty ground.
Getting caught unawares (though maybe not quite like the iguanas) is something we expect from the weather. You just can’t always prepare well for sudden shifts in temperature or weather patterns.
And speaking of not getting caught off guard, here’s an updated piece of news to be aware of: The IRS is now saying that the advance Child Tax Credit amounts listed in the letters sent to San Diego taxpayers might not match the amounts listed in taxpayers’ online accounts. The numbers online should have been updated on Mon, Jan 31 — the discrepancies mostly apply to those with changed addresses or bank accounts or those who experienced direct deposit payment failures.
This, again, is one of the ways we can help our Southwest California clients avoid filing mistakes (by catching the IRS’ mistakes). So, let’s get a head start on filing your taxes. Book a time with us now:
858-549-9666
Now, let’s discuss the pros and cons of long term care insurance so you (or your family) don’t get caught off guard by the cost of care.
Pros and Cons of Long-Term Care Insurance: Top Hat Tax & Financial Services’s Guide
“Do I have a long-term plan? Kind of … But it’s funny what comes down the pike.” – Jeff Bridges
You insure your home, your car, even your medical expenses. But what about insuring your future, too?
It can be hard to think about that many years ahead – especially if you’re feeling fine and healthy right now – but long-term care insurance (LTC for short) is an increasingly popular choice for peace of mind.
Like many things about the future, this option comes with pros and cons, but it’s worth looking into. So, let’s walk through it.
Why do I need more insurance now?
Lead a healthy lifestyle? Come from a family where people just seem to hang on for a really long time? …
Believe it or not, it’s because you’re fit as a fiddle that you might need extra financial help for that long haul. In one of life’s little ironies, the healthiest people often wind up needing long-term care assistance later in life. See, not only might heart disease, cancer, or some other illness take somebody else sooner than they would you, those illnesses also usually require care that’s covered under many standard health insurance policies.
Many people do go into nursing homes when they get older – if they can afford it. Though varying from state to state, the average cost of a nursing home is a three-figure sum per day (you heard right: per day), though assisted living facilities average a little less. All too many people spend down their assets until they qualify for Medicaid.
While care facilities might be excellent for some, suppose you’d just like to live on your own for as long as you can? If you stay fit far into old age – knock on wood – the kind of care you might need would be more day-to-day independence: cooking, cleaning, dressing, maybe somebody to make sure you take your pills and help you keep things in order.
That stuff definitely isn’t covered by standard health insurance.
Money matters
The American Association for Long-Term Care Insurance says that last year hundreds of millions of dollars more were paid out in LTC than in 2020. Right now insurers are paying out billions more than they did just four years ago. The average claim was close to forty grand.
Know going in that LTC is like any other kind of insurance: You may payout for years and never use the coverage. Consider yourself lucky in that case.
Now, let’s assume you’re not rich and the sky is not the limit on your sunshine years lifestyle. The average LTC policy bumps up against two grand a year. That provides coverage that you would burn through quickly if you had to go to a full nursing home – but an amount that could keep you living on your own in your own home, with a little help, for some time.
All that also assumes that your income during your later years will be zero. But like most, you’re probably somewhere between a billionaire and a pauper. Suppose when you get older you have an IRA, Social Security, and maybe even a pension? Supplemented by that income, suddenly a cheaper LTC plan might work great for you.
Now, for the pros and cons of long term care insurance.
Pros
LTC can free up some of your income in those later years for fun, like traveling. If your health holds, those fun things will be at the top of the bucket list. So, it would be nice to have the cash available.
Having this insurance can help you avoid dipping into assets like stocks to pay for care.
If your policy qualifies (check with the insurer), you can – as tax laws stand now – deduct your premiums from your taxes if you itemize deductions and if your medical costs are more than a certain portion of your income.
Cons
Beyond the possibility that you’ll never need your LTC payout (but again, luck of the draw here), these policies can be expensive and detailed.
You’ll probably need to pass a physical to qualify. And a lot of people don’t pass. And it can be almost impossible to figure out what kind of coverage you’re going to need in which years of your later life.
Knowing the pros and cons of long term care insurance can help you decide if the coverage is for you. We’re accounting and tax experts, but we’d be happy to help you find a great San Diego insurance pro who can help. Reach out to us by scheduling a time here:
And also, let’s get your filing appointment scheduled soon. We’re here and ready to help you stay ahead of things.
Keeping you in the know,
Darryl A. Hale, EA, MBA, MST