How much do you think long-term care insurance costs? The higher someone's net worth the more sense it makes to own long-term care insurance. Only fifty basis points off of that one million could buy a long-term care policy with a million dollars worth of benefits. What do you mean by "too many holes"?
Over 330,000 people will receive benefits from their long-term care insurance policies this year.
Consult your tax advisor, but if you want to leave assets to heirs, it's usually better to leave them real estate and highly appreciated stocks. Capital gains taxes are nullified when real estate is inherited. If you leave your heirs your traditional retirement accounts they will get hit with a huge tax bill. If you're going to self-fund for long-term care, use your traditional retirement accounts (401k, 403b, TSP, tIRA, etc...) because much of the tax can be nullified because long-term care expenses are tax-deductible. However, what often happens with plans to "self insure" is that they turn into spouse-care or daughter care or daughter-in-law care or niece-care. The person who decided to self-insure is usually not the one making the big decisions at the time that care is needed.
The cost of a policy varies based upon your health and the state you reside in when you purchase the policy. How much you should buy depends upon whether or not your state is a "LTC Partnership" state. Those states have special long-term care insurance policies that allow you to protect your assets from Medicaid even if your policy runs out of benefits. If you live in one of those states you only need to buy an amount of long-term care insurance equal to the amount of assets you want to protect. For example, if you want to protect $1M, if your LTCi Partnership Policy pays out $1M if you ever chose to apply for Medicaid, you could keep $1M of countable assets. The average long-term care insurance premium in 2023 was about $4,100 per year for one person. If they are healthy, a couple in their mid-sixties could probably buy about $1M of shared LTC benefits for about $300 per month per spouse.
After paying the capital gains tax on the beach home, and using the remaining equity to pay for care, which asset will you liquidate next? The problem with self-funding long-term care is that we don't know when we might start to need care, we don't know how long we'll need care for, and we don't know how long the healthy spouse will live after the first spouse passes away.
You state, "1. You have no control over the annual premiums..." A) There are long-term care insurance policies that have premiums that are guaranteed to never go up. B) 41 states have enacted the "Rate Stability Regulation". The rate stability regulation has had a big impact on reducing long-term care insurance rate increases because it penalizes the insurance companies if they request a rate increase. You state, "2. With the traditional it is a "use or lose" it." Auto insurance is use or lose.
Homeowners insurance is use or lose.
Medical insurance is use or lose.
Term life insurance is use or lose.
Disability insurance is use or lose. Why is "use or lose" even an issue? You state, "3. With the Hybrids, you also have the option of "pooling" the money with your spouse." Five traditional long-term care insurance companies allow spouses to pool benefits. Only two hybrids allow that.
A regular IRA is the best way to self-fund for long-term care because long-term care expenses are tax-deductible. The tax due on the withdrawal from a "regular IRA" can be wiped out in full (or nearly) by the long-term care expenses incurred. HSA's should be used to pay long-term care insurance premiums, not used to pay for long-term care expenses. It does not make any sense to use an HSA to "self fund" for long-term care. The HSA is tax-free money. Why would anyone use tax-free money to pay for tax-deductible expenses?
Comments
How much do you think long-term care insurance costs? The higher someone's net worth the more sense it makes to own long-term care insurance. Only fifty basis points off of that one million could buy a long-term care policy with a million dollars worth of benefits. What do you mean by "too many holes"? Over 330,000 people will receive benefits from their long-term care insurance policies this year.
Post: How Are You Planning to Pay for Potential Long Term Care Expenses?
Link to comment from February 14, 2025
Why would anyone down vote a factual statement that most care is received at home and provided by family members?
Post: How Are You Planning to Pay for Potential Long Term Care Expenses?
Link to comment from February 13, 2025
Consult your tax advisor, but if you want to leave assets to heirs, it's usually better to leave them real estate and highly appreciated stocks. Capital gains taxes are nullified when real estate is inherited. If you leave your heirs your traditional retirement accounts they will get hit with a huge tax bill. If you're going to self-fund for long-term care, use your traditional retirement accounts (401k, 403b, TSP, tIRA, etc...) because much of the tax can be nullified because long-term care expenses are tax-deductible. However, what often happens with plans to "self insure" is that they turn into spouse-care or daughter care or daughter-in-law care or niece-care. The person who decided to self-insure is usually not the one making the big decisions at the time that care is needed.
Post: How Are You Planning to Pay for Potential Long Term Care Expenses?
Link to comment from February 13, 2025
The cost of a policy varies based upon your health and the state you reside in when you purchase the policy. How much you should buy depends upon whether or not your state is a "LTC Partnership" state. Those states have special long-term care insurance policies that allow you to protect your assets from Medicaid even if your policy runs out of benefits. If you live in one of those states you only need to buy an amount of long-term care insurance equal to the amount of assets you want to protect. For example, if you want to protect $1M, if your LTCi Partnership Policy pays out $1M if you ever chose to apply for Medicaid, you could keep $1M of countable assets. The average long-term care insurance premium in 2023 was about $4,100 per year for one person. If they are healthy, a couple in their mid-sixties could probably buy about $1M of shared LTC benefits for about $300 per month per spouse.
Post: How Are You Planning to Pay for Potential Long Term Care Expenses?
Link to comment from February 13, 2025
After paying the capital gains tax on the beach home, and using the remaining equity to pay for care, which asset will you liquidate next? The problem with self-funding long-term care is that we don't know when we might start to need care, we don't know how long we'll need care for, and we don't know how long the healthy spouse will live after the first spouse passes away.
Post: How Are You Planning to Pay for Potential Long Term Care Expenses?
Link to comment from February 12, 2025
You state, "1. You have no control over the annual premiums..." A) There are long-term care insurance policies that have premiums that are guaranteed to never go up. B) 41 states have enacted the "Rate Stability Regulation". The rate stability regulation has had a big impact on reducing long-term care insurance rate increases because it penalizes the insurance companies if they request a rate increase. You state, "2. With the traditional it is a "use or lose" it." Auto insurance is use or lose. Homeowners insurance is use or lose. Medical insurance is use or lose. Term life insurance is use or lose. Disability insurance is use or lose. Why is "use or lose" even an issue? You state, "3. With the Hybrids, you also have the option of "pooling" the money with your spouse." Five traditional long-term care insurance companies allow spouses to pool benefits. Only two hybrids allow that.
Post: How Are You Planning to Pay for Potential Long Term Care Expenses?
Link to comment from February 12, 2025
I sure didn't win any popularity contest with that post.
Post: How Are You Planning to Pay for Potential Long Term Care Expenses?
Link to comment from February 11, 2025
A regular IRA is the best way to self-fund for long-term care because long-term care expenses are tax-deductible. The tax due on the withdrawal from a "regular IRA" can be wiped out in full (or nearly) by the long-term care expenses incurred. HSA's should be used to pay long-term care insurance premiums, not used to pay for long-term care expenses. It does not make any sense to use an HSA to "self fund" for long-term care. The HSA is tax-free money. Why would anyone use tax-free money to pay for tax-deductible expenses?
Post: How Are You Planning to Pay for Potential Long Term Care Expenses?
Link to comment from February 11, 2025
HSA's are the second worst way to self-fund long-term care. The worst way is a Roth IRA.
Post: How Are You Planning to Pay for Potential Long Term Care Expenses?
Link to comment from February 10, 2025
"Save all that you can." Really? I never thought of that before.
Post: How Are You Planning to Pay for Potential Long Term Care Expenses?
Link to comment from February 10, 2025