Excellent articles to read about long-term care insurance and related topics (Click on the pertinent article to view it)

"People Purchase Long-Term Care Insurance to maintain financial independence , preserve their personal dignity, and control treatment" - From CPA Journal (10/2001, pages 70-71)

 

"Long-term care merits your immediate attention" - From The Journal News (11/4/2001 - page 4D)

Click here for flyer of 9/6/2001 seminar at Orienta Beach Club,

with speakers Judd Sloane, CLU and Frank Sisco, CPA, PFS

#1 - Determine your process for decision-making.
Are you using a financial advisor (e.g. financial planner, CPA, insurance agent, etc.)? If so, who will it be? Does he or she have access to experienced general agents to get key info? Input from relatives such as spouse, children, parents? Expectations? How detailed do you want to get?

#2 - Determine your need for long-term care insurance.
(in the context of your health, your finances, your family relationships, your risk tolerance level, etc.)

#3 - Gather the appropriate information.
(Financial info about yourself, quotes on different policies, what-if scenarios, etc.)

#4 - Compare policies and compare adjustments to finances if necessary.

#5 - Choose the policy that is right for you and adjust finances if necessary.

B. - Do you need it? - You probably need long-term care insurance.

In my opinion, only if you meet all the following 3 criteria could you make an argument that you don't need long-term care insurance.

#1 - You are in excellent health and have an excellent chance of not needing long-term care (e.g. great family health history, not accident-prone)

#2 - You have significant wealth and you are willing to bear the financial cost of a long-term care disability (e.g. can withstand a loss of about $300,000 without affecting financial stability or cash flow)
(or you have no assets and such long-term care costs will be fully borne by another (e.g. Medicaid, welfare, wealthy children or parents)

#3 - You can emotionally handle both (a) living without sufficient protection against a long-term care disability or (b) living in the aftermath of a long-term disability without sufficient protection, including the effects on other family members. This is credible if you have demonstrated in your past that you (1) have taken financial risks such as aggressive investing, not carrying certain insurances, being in risky business ventures,etc. and (2) have lived through severely upsetting times, financial wise and health wise)

#1 - Indemnity vs. cost reimbursement; professional vs. unlicensed providers

#2 - Coverage for nursing homes, home-care, and assisted-living facility

#3 - Coverage variables – Daily benefit, time period of benefits (e.g. lifetime, 6 years, 3 years, etc.), elimination period, inflation protection

#4 - Personal policies vs. group plans

#5 - Miscellaneous provisions (e.g. definition of disability, Alzheimer’s disease and other organic brain disorders, mental and nervous conditions, discounts for spouse, account with financial service institution, respite care, tax aspects, bed reservations, daily vs. weekly and monthly benefits, pool concepts, etc.

D. Examples of restructuring cash flow and investments

to enable premium payments

 

#1 - Increase investment income

(e.g higher-yielding certificates of deposit, taxable bonds or tax-free bonds, transfer annuities to higher-rate annuities)

 

#2 - Reallocate investments to get more cash flow

(e.g. take more income from investments such as a higher payout from annuities; annuitize certain annuities, immediate annuities for other investments, protect equity investments via principal-protected investments and spend more of principal, shift unearning investments to earning investments, etc.)

 

#3 - Cut certain expenses
(e.g. gift giving, income taxes, real estate taxes, excessive consumer spending, reduce life insurance premiums)

 

#4 - Miscellaneous

(e.g. family pooling of cash to pay premiums, sale of rental properties, sale of underperforming assets, gifts from family members, etc.)

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E. Deductibility of long-term care insurance premiums by individuals

 

The premiums are deductible as a medical expense (subject to the 7.5%-of-AGI- threshold limitation) reportable as an itemized deduction on Schedule A of Form 1040 (subject to qualification of itemizing, and to certain phase-out limitations). The amount deductible for 2001 as a medical expense depends on your age, as follows:

40 or less - $230

41 - 49 - $430

49 - 59 - $860

59 - 70 - $2,290

over 70 - $2,860

 

Note: Certain arrangements allow for greater deduction. (e.g. The payment of premiums by a C Corporation for an employee under a group plan qualifies as a full deduction by the corporation and is not income for the individual. See Frank Sisco for more info.