Q: What is long-term care insurance?
A: Long-term care insurance is custodial care insurance. It covers care generally not covered by health insurance or Medicare insurance. Long-term care insurance generally covers home care, assisted living, adult day care, respite care, hospital care, nursing homes and Alzheimer’s facilities. When home care coverage is purchased, long-term care insurance pays for home care from day one. It will also pay for a visiting or live-in caregiver, companions, housekeepers, therapists or private duty nurse.
Why should you consider long-term care insurance? If you have assets to protect and you want to leave these assets to your children or other family members, it’s a good insurance to have. Your medical insurance or Medicare insurance will not cover custodial care. If you have assets, you must pay out of your own pocket for the care. When you have spent down to your last $3,500, then you will qualify for Medicaid. At this point, you will not have much choice in the type of care you are given, or where the care is given.
You will qualify for benefits when you need substantial assistance with at least two of the six activities of daily living. They are bathing, eating, dressing, toileting, continence and transferring (getting in and out of bed, the shower, etc.). In addition, it is expected that you will need substantial assistance for at least 90 days, or you need supervision because you have a severe cognitive impairment. Your own doctor, nurse, licensed social worker certifies from time to time that you need the supervision.
The cost of long-term care insurance basically depends on your age, the amount of daily or monthly insurance you want, the elimination period (the amount of time before your benefits go into effect) and any options you may select. Naturally, the younger you are, the lower the premium.
Long-term care insurance premiums are tax deductions in your federal and New York State and City tax returns. The premiums can save you tax dollars. You may think that the cost of the insurance is high, or that you will never need it, but it is a great way to protect your assets because nursing home stays in New York City are about $15,000 per month.
Gary E. Reska offers individual and business taxes, and complete bookkeeping and business forms service. Contact him at 212-249-2525 or firstname.lastname@example.org.
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