Long-Term Care Insurance

Long-Term Care Insurance Explained
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What Is Long-Term Care (LTC) Insurance?

Long-term care (LTC) insurance is coverage that provides nursing-home care, home-health care, and personal or adult daycare for individuals age 65 or older or with a chronic or disabling condition that needs constant supervision. LTC insurance offers more flexibility and options than many public assistance programs, such as Medicaid.

KEY TAKEAWAYS

  • Long-term care insurance usually covers all or part of assisted living facilities and in-home care for people 65 or older or with a chronic condition that needs constant care.
  • It is private insurance available to anyone who can afford to pay for it.
  • Long-term care insurance offers more flexibility and options than Medicaid.

Understanding Long-Term Care (LTC) Insurance

Many people are unable to rely on children or family members for support and buy long-term care insurance to help cover out-of-pocket expenses. Otherwise, long-term care expenses would quickly deplete the savings of an individual and/or their family.

Special Considerations

Many experts suggest shopping for long-term care insurance between the ages of 45 and 55, as part of an overall retirement plan to protect assets from the high costs and burdens of extended healthcare. Long-term care insurance is also cheaper if you buy it younger. In 2020, the average annual premium for a couple, both 55-years-old, is $3,050, according to the American Association for Long-Term Care Insurance.4

Long-term care insurance premiums can be tax deductible if the policy is tax-qualified and the policyholder itemizes tax deductions, among other factors. Usually, companies that pay long-term care premiums for an employee can deduct them as a business expense.5