Long Term Care Insurance Association Shares Money Saving Strategies

An initial series of real examples of ways individuals saved on their long term care insurance have been published long term care insurance cost comparisons from long term care insurance specialist online by the American Association for Long Term Care Insurance, a national trade group.  The organization plans to add one new idea weekly as part of their consumer awareness and educational efforts.

“More Americans are investigating long-term care insurance for the first time and mistakenly think all plans, options and prices are pretty standardized,” declares Jesse Slome, director of the American Association for Long Term Care Insurance (AALTCI).    ”They are shocked to learn how simple it is to overpay for coverage or how by asking the right questions, they can save hundreds of dollars every year.”

As part of the organization’s consumer awareness and education efforts, the Association has added real examples of ways people reduced the cost of their coverage or secured better benefits suited to their particular situation and budget.  “Our goal is to give people real examples that they may relate to,” Slome adds.  “By reading the explanations a consumer can learn what to look for and what questions to ask.”

The Association plans to add one new real example each week.   Many of the examples are provided by long term care insurance specialists.  “If you have heart issues you want to consult a cardiologist who specializes,” Slome explains.  “Today, your long term care options can be enormously complex and working with a long term care insurance specialist can be beneficial even if all you want is to get a second opinion,” he adds.

The initial situations examine situations where an individual wanted her daughter to provide care.    “Two policies appeared to both offer this option but one limited the benefit that would be paid to unlicensed family members,” Slome reports.  “Unless you read the insurance policy small print, you’d never know this until you actually file a claim years from now.”

Long Term Care Insurance Partnership Information Provided

A new online resource dedicated to information on the Long Term Care Insurance Partnership Program was launched today by the American Association for Long-Term Care Insurance.

The Partnership is a joint federal-state policy initiative to promote the purchase of private long term care insurance.   Available in the majority of states, the Partnership Program is intended to expand access to private long term care insurance policy to pay for long term care services.  The program has grown since being introduced initially in four states, California, New York, Connecticut and Indiana.

“The Association has been receiving a number of inquiries by individuals frustrated that no single resource exists where current information regarding approved states is available,” declares Jesse Slome, director of the American Association for Long Term Care Insurance (AALTCI).    ”The Association’s website seemed the perfect resource as thousands of individuals visit the site looking for information.”

An updated list of states is a prominent feature of the new webpage.  “We show effective dates for all 50 states and the District of Columbia as well as which states offer policy reciprocity.  In addition, a number of Frequently Asked Questions are addressed.

The American Association for Long Term Care Insurance is the national trade organization established to provide consumer information and connect interested consumers with professional long term care insurance specialists.  “Some insurance products are commodity products but long term care insurance can be quite complex and working with a knowledgeable specialist is typically the best choice for a consumer,” Slome notes.

Boomers Overlook Long Term Care Insurance Tax Deduction Strategy

The future tax deductibility of long term care insurance premiums is overlooked by millions of working age baby boomers.

“An individual can deduct as much as $4,660 for long term care insurance premiums paid in 2014,” explains Jesse Slome, director of the American Association for Long Term Care Insurance (AALTCI), the national trade group.  The maximum amount for 2013 is $4,550.  ”During their working years, individuals rarely qualify for the long term care insurance tax deduction. After retirement, qualifying is typically easier.”

The Internal Revenue Service considers tax-qualified long term care insurance premiums a medical expense for individuals. The yearly maximum amount depends on the insured’s attained age at the close of the taxable year.  “Someone older than 50 but younger than 60 can deduct up to $1,400 ($2,800 for a same-age couple),” Slome notes.  An individual age 70 or older can include up to $4,660 ($9,320 for a same-age couple).  The amounts are indexed for inflation and increase each year.

“During your working years, it’s hard to take advantage of the long term care insurance tax deduction,” Slome admits. “Your salary or self-employed income makes meeting the IRS-required threshold (to deduct medical expenses) difficult.”  Only 22 percent of the 10.4 million tax returns filed by individuals between 55 and 65 who itemized deductions in 2011 had medical and dental expenses in excess of the limitation.

After retirement age the reverse is true. “Your salary income drops or disappears completely making it far more likely you’ll be deducting medical expenses,” Slome shares.  IRS data validates that nearly 60 percent of the 8.1 million tax filers age 65+ who itemize deductions had medical expenses in excess of the limitation.

“After retirement owning long term care insurance can help lower your tax bill,” Slome says. “But, it’s best to obtain this coverage prior to retirement because the costs are lower and you are more likely to meet health qualification requirements,” the expert adds. “The ‘Buy Now – Deduct Later‘ strategy secures your protection. The future tax deduction is an extra benefit for your post-retirement years.”

Long Term Care Insurance Rate Increase Reporting Distorted

Consumers considering the purchase of long term care insurance for themselves or their spouse now mistakenly believe their cost will increase on a regular, sometimes yearly basis cites Jesse Slome, director of the American Association for Long Term Care Insurance (AALTCI).

According to an informal survey just conducted by the Association’s Consumer Information Call Center, concern about future rate increases is one of the more frequent concerns among those considering insurance coverage.

“It’s understandable and unfortunate because little is being done to address the mistaken perception that increases on policies written years ago mean new policies will be treated similarly,” admits Slome.   “And, then you have those who advocate for a national government long term care program misfeeding incorrect information which only throws fuel on the fire of confusion.”

Slome referenced a recent article posted on the Forbes website that could easily mislead readers into thinking all newly written long term care insurance policies will face a two-to-five percent yearly increase in costs.  “This is blatantly not true and a quote used to mislead,” Slome explains, “but a consumer reading this could understandably think it’s likely to happen to them.”

According to the Association, premiums for long term care insurance are designed to be ‘level’.   “The price is based on your age when you apply and set,” he notes.  “If an insurer wants to charge more in future years they must seek approval from the State Departments of Insurance and provide a substantive demonstration of why a rate increase is needed.  Something significant must have changed that impacts their future ability to pay claims.”

“The past does not equal the present or the future,” Slome notes.  He cites that rate increases on individual policies written years ago had the greatest impact on options that raised benefit amounts by five percent annually.  “Insurers did not anticipate the sustained low interest rate environment but today’s new policies are priced with that already factored in, so that concern shouldn’t remain.  People were given the option to continue paying the same amount but their future benefits would now start growing at say three percent.”

Slome hopes to undertake some further consumer awareness efforts to help address the concern of consumers.   “This is a complex topic and if people are concerned we owe it to them to address concerns in a straightforward and honest approach,” Slome concluded.

Should Long Term Care Insurance Cost Women More?

There is sound reasoning that explains why women pay more for long term care insurance contends one of the nation’s leading long term care insurance experts.

“Prices for insurance are based on risk which is why men pay more for life insurance and bad drivers pay more than good drivers,” declares Jesse Slome, director of the American Association for Long Term Care Insurance (AALTCI).    Slome was reacting to the National Women’s Law Center administrative complaint filed against Genworth, John Hancock, Transamerica and Mutual of Omaha on the grounds that gender-based premiums for long-term care insurance violated a provision of the Affordable Care Act.

“I wonder if they realize that men pay more for Medicare Supplement insurance, which augments Medicare health benefits?” Slome posited.    He noted that a recent comparison of equal policy amounts revealed that men paid 15 percent more than a same-age female applicant.

“Women have a far greater risk of needing long term care insurance and, in fact, receive two-thirds of the claim benefits paid by insurers,” Slome noted.  The organization recently released the results of a study reporting that long term care insurers paid some $7.5 billion in claim benefits in 2013, a significant increase over the prior year.

According to AALTCI, unisex rates, where single women pay the same as single men, are still available in a number of states.  “The opportunity to take advantage of this is ending as insurers continue to roll out new policies on a state-by-state basis,” Slome admitted.   The Association recently reported that unisex rates could still be found in 16 states.  “But the number keeps declining which is why we urge single women in their 50s and 60s to at least inquire into what long term care insurance costs,” Slome shared.

Long Term Care Insurance Costs Vary 114 Percent

A 60-year old couple can pay $3,100 a year for excellent long term care insurance protection or they can pay $6,500 a year for comparable coverage according to a just-released industry analysis.

“Each long term care insurance company sets the prices they want to charge and the range can be quite significant explains Jesse Slome, director of the American Association for Long Term Care Insurance (AALTCI), the national trade group which analyzes policy costs for both individuals and couples.

“Unlike other types of insurance coverage where you can switch from one insurance company to another in later years, switching long term care insurance companies almost never takes place,” Slome notes.  “You don’t switch after a year or two because you’ll pay higher rates based on your new age and you’ll have to meet the current health standards.”

“Consumers mistakenly think they can buy coverage directly from insurance companies,” Slome states.  “They’ll simply direct you to an agent who favors their policy or may only be able to sell you their particular policy.  That might be your best choice but it might not be.”

Slome advocates the ‘Good, Better, Best’ approach to long-term care insurance planning.  “For a couple both age 60, a good plan of coverage provides each spouse with $164,000 of potential benefits and costs about $165-per-month,” Slome explains.  Better coverage takes advantage of the Guaranteed Purchase Option offered by some insurers.  “The best coverage includes an inflation option but this can easily double costs,” he notes.

“We also advise consumers that their most important decision is selecting the right professional to work with,” he adds.  According to the organization, a long term care insurance specialist can compare multiple insurers and offer you the policy that best suits your age, your health and budget.

Seniors Can Avoid Tax Penalty Advises Long Term Care Insurance Association

Every year seniors fail to take advantage of tax reduction strategies and a growing number face significant tax penalties notes a leading long term care insurance expert.

“The IRS is aware of the growing non-compliance by seniors who fail to take minimum IRS distributions and is expected to crack down to capture lost tax revenue,” declares Jesse Slome, director of the American Association for Long Term Care Insurance (AALTCI).  Some reports note that as many as 250,000 seniors fail to take the minimum required distribution.

“The required minimum distribution is the amount the federal government requires you to withdraw each year, usually after you reach age 70½, from your retirement accounts,” Slome explains.  “You pay taxes on the withdrawn funds and failure to comply can result in a potentially hefty 50 percent tax penalty.”

“The amounts withdrawn could be used to pay long term care insurance premiums which could be fully tax deductible to the senior,” Slome notes.   “There’s a two-fold tax advantage, avoiding the income tax and potential penalty and of course the value provided by having the long term care insurance protection.”

Individuals who are age 70 or older can each deduct $4,550 of their premiums off their 2013 tax filings.  “If both spouses are over age 70, that’s a $9,100 potential tax deduction you don’t want to overlook,” Slome adds.   Individuals must meet certain levels of related tax-deductible expenses to claim the tax deduction for long term Care insurance.    “Many seniors have other medical and even dental expenses that enable them to easily meet the threshold required to make long term care insurance premiums deductible.”

Slome noted that seniors who do not already own this protection should work with a knowledgeable specialist who can help them navigate the health requirements imposed by leading insurers including Genworth Financial, John Hancock, Mutual of Omaha and Transamerica Long Term Care.  “Not everyone can health qualify for long term care insurance,” Slome shares, “and the health requirements can vary quite significantly from one insurer to the next.”