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The Advantages of Long-Term Care Insurance

Purchasing a long-term care (LTC) insurance plan provides several benefits for the policy owner and insured individuals. These plans pay for services and activities to take care of elderly and disabled individuals that are not covered by regular health insurance policies. Premium payers and insureds also enjoy tax savings, one of several advantages of having LTC insurance coverage.

  1. Policy Options

    • LTC plans offer several options that meet the needs of the insureds as well as the financial capabilities of the policy owners. Applicants can pay for comprehensive plans, which are more expensive but provide more services, or "facility use only" policies, which cover services provided in places such as nursing homes and adult day care centers. Some LTC plans can provide unlimited coverage for as long as the insureds need LTC services, or plans can pay out for time periods specified in the policies. Also, policy owners can increase or decrease the daily dollar amounts used to cover services used by the insureds.

    Taxation Benefits

    • Individuals who pay for long-term care services out of pocket can take advantage of the tax benefits that are part of qualified LTC plans. Premiums from qualified LTC plans are considered medical expenses and are able to be deducted from the policy owners' tax forms. The amount of the deductibles are limited based on the age of the insureds and inflation. Benefit payments from qualified LTC plans are paid out tax-free as well.

    Insurers Pay Costs

    • The average cost of LTC services is $75,000 per year, as of 2008, according to the Long Term Care Insurance National Advisory Center website. With these costs rising each year, paying for these services can become very expensive for any family. However, with LTC plans, insurance companies become responsible for covering the costs of these services. Without insurance coverage, individuals and families would have to use their own financial resources, which can include their retirement savings. Also, if there aren't sufficient funds to pay for services, family members may have to take care of the elderly themselves.

    Services Covered

    • LTC plans cover a wide range of services for individuals who need assistance in different areas of their everyday living. Some of the covered services include skilled nursing care; personal care; occupational, rehabilitation, physical and speech therapy; homemaker services; and hospice and respite care. These policies also cover services provided in adult day care centers, assisted living facilities and nursing homes.

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