Long Term Care Planning

...protecting families, assets, income, past successes & future dreams!


Click to read about Genworth's Long Term Care Insurance Pricing Phlosophy

 
LTC Links

 

The Baby-Boomers have reshaped American economic life. Their impending retirements will bring profound economic opportunities.  Be there with our products, service and marketing support and you'll stand to benefit by counseling baby-boomers in preparation for active aging, long productive lives in retirement, and the need to plan for the possible illnesses and disabilities requiring long term care.  Call now!  We'll help you with this.

Taxation & Long Term Care Insurance

TABLE 1
Entity Deductibility Income Reporting Discrimination Rules Tax Treatment
of Benefits
Individual The lesser of the Premium or the Eligible Premium from Table 2.  Medical Expenses are deductible to the extent they exceed 7.5% of Adjusted Gross Income. N/A N/A Tax-Free
Self-Employed Percentage from Table 2 of the lesser of Premium or Eligible Premium is deductible as a business expense.  The remaining percentage is included as a Medical Expense under the 7.5% rule. No None Tax-Free
S Corporations
Partnerships
LLC's		 Same as self-employed The portion of the Premium paid by the entity on behalf of a partner is included in the partner's income. None Tax-Free
C Corporations The entire Premium is fully deductible by the corporation. No None Tax-Free

 

TABLE 2
Tax Year 2008 2009 2010
Age at end of
Tax Year		 Eligible Premium
Eligible Deduction: 100%		 Eligible Premium
Eligible Deduction: 100%		 Eligible Premium
Eligible Deduction: 100%
40 & Under $310 $320 $330
41 - 50 $580 $600 $620
51 - 60 $1,150 $1,190 $1,230
61 - 70 $3,080 $3,180 $3,290
71 & Over $3,850 $3,980 $4,110

 

Top of Page

 

Many of our producers find the LTC Decison Tree (below) to be a useful guide in their discussions with prospective clients in Long Term Care planning sessions.

LTC Decision Tree

Top of Page

 

LTC Planning Should Start Sooner Rather than Later
Percentage of LTCi Applicants
Qualified for Good Health Discount		 Percentage of LTCi Applicants
Denied Individual Coverage
Applicant Age Average in 2007 Applicant Age Average in 2007
Under 30 63.2% Under 50 7.3%
30 to 39 66.3% 50 to 59 13.9%
40 to 49 66.8% 60 to 69 22.9%
50 to 59 51.5% 70 to 79 44.8%
60 to 69  42.2% 80 & Over* 69.8%
70 to 79 24.2%    
80 & Over 12.9%    
* Note: Several insurers no longer accept applicants age 80 or older.

Source:
American Association for Long-Term Care Insurance 2008 Study of 250,000 individual policy applicants (2007 & 2008 data) and February 2006 study of 100,000 individual policy applicants (2005 data).

 

Top of Page

 

The True Cost of Waiting
Let’s say a 55-year old is contemplating buying a long-term care insurance policy with a daily benefit of $200. The inflation option selected is 5% compound. If the 55-year old waits 5 years, he/she will not only have to buy the policy based upon the rates for a 60-year old, he/she will also have forfeited five years of compounding. The $200/day would have grown to $255/day, and this is the proper comparison. To retain the value in the contract, for every year you wait you need to buy an additional 5% of coverage. Therefore, the Cost of Waiting (solely based on the difference in age) is 25.3%, but the True Cost of Waiting (based on both difference in age as well as the increase in cost of care) is actually 60.0%.
Ages Cost of Waiting The True Cost of Waiting
40 - 45 9.6 % 39.6 %
45 - 50 8.1 % 38.0 %
50 - 55 8.1 % 38.0 %
55 - 60 25.3 % 60.0 %
60 - 65 34.8 % 72.0 %
65 - 70 50.9 % 92.6 %
70 - 75 62.6 % 107.53 %
The above is based upon a MetLife VIP2 Ideal policy (CT-P) with the following benefits: $200/day (monthly reimbursement) – 100% HHC, 4 years, 100-days E.P., 5% compound, preferred & spousal discount.
Top of Page