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What Can I Expect to Pay Out-of-Pocket?

Costs for long-term care services vary greatly depending upon several factors: geographic area, facility size, level of care you need and services included in the base rate. And of course, supply and demand has something to do with it. A misconception is that rural areas will cost less than urban but that may not be the case.  When planning, you must consider that the cost will be much higher by the time you need the care.

Click here to access the 2018 Cost Chart

and learn how much home care, assisted living and the nursing home rates are in your region.

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Filial Responsibility Laws - Will You Pay for a Parent's Care or Your Children Pay for Your Care? 
Could you be legally liable for paying for the care of an elderly parent or could your children be held responsible for your care? Under the Filial Support Laws, you most certainly could. In 29 states, it most definitely can happen and does all the time. The laws are extremely old. They originated in England when public assistance was limited. Families were expected to band together and pick up the cost of care for family members. Public assistance was available, but only intended for elders who had no family.

When the United States was settled, much of the legal standard the country adopted was based on English law. It was, after all, what people new. The Filial Support Laws were part of that body of laws and thus adapted. Although 30 states have these laws, each state has a slightly different version. In some states, only the children of the person are responsible for providing care while other states expand the requirement to include grandchildren! In California, it is a misdemeanor to not comply with the law! In other states, family members can sue other family members to make them pitch in on the cost of care.

At this point, you are probably very interested in seeing a list of the states that have such laws. In alphabetical order, they are Alaska, Arkansas, California, Connecticut, Delaware, Georgia, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Mississippi, Montana, Nevada (Nevada law only addresses support of children and not support of parents. NRS Chapter 125B), New Hampshire, New Jersey, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Virginia, West Virginia. 
In addition, the Commonwealth of Puerto Rico also has filial responsibility laws.  As Medicaid budgets become more strained, look for other states to adopt this law.  For more information on Medicaid, click here.

How Long Will You Need Care?
Nearly 90% of the care begins in the home by a unpaid family caregiver before outside help is required. The number of years that families care for their loved ones on their own is difficult to track. The Department of Health and Human Services (2014) reports that women will require an average of 3.7 years of care in a facility compared to men at 2.2 years. When planning for long-term care you want to use these years as being the most expensive.

Not Your Grandparents/Parents Policy!
If you watched your grandparents or  parents use their long-term care insurance you might have some misconceptions we need to clear up. The first long-term care insurance policies were sold in the 1980s and it was referred to as "nursing home insurance."   Think about that for a second. In 80s we didn't have assisted living or other care facilities like we do today. The notion of "home care" was a family member, friend or neighbor helping out. We now have many options for our care and the insurance plans include benefits that provide you with choices.  Your parents' policy may also been based on "reimbursement" of daily cost of care unlike today where many plans are based on a monthly benefit and pays a cash benefit. Back then we thought a benefit of $100/day is more than we would need so let's leave off that inflation protection that would grow our benefit. How much care will $100 per day benefit give you? Depending on where you live, maybe an hour and a half of home care.

Nearly 2/3 U.S. households (64%) will not be able to maintain their standard of living in retirement because of the cost of their long-term care. (reported by Center for Retirement Research at Boston College)

Today’s private long-term care insurance programs offer so much more:

  • First-day cash benefits!
  • Day-one cash paid with no restrictions on how the cash is used.
  • You can use this cash to supplement their current disability coverage by paying bills, additional expenses, etc.
  • Benefits of $10,000 a month or more 
  • Benefits to cover the full progression of care including home health care, assisted living facilities and nursing home
  • Return of premium options available
  • Waiver of premium when on claim
  • Spousal benefits for an spouse that isn’t insurable
  • Spousal survivor benefits
  • Shared-Care benefits

What does Long Term Care Insurance Cost?
The cost of a long-term care insurance policy is going to depend on several factors:
1) Your health (current and past issues)
2) Your age
3) Your gender (women pay more for their coverage)
4) Your marital status or if you live in a two-person household (less expensive than single households)
5) The benefits and options you choose
6) Any discounts you may be eligible for (preferred status and association discounts)

What is State Partnership?
Most states participate in a “partnership” that combines private long-term care insurance and Medicaid Extended Coverage. First, you purchase a Partnership policy from one of the participating insurance companies. Second, you use the policy benefits. If you need Long-Term Care after policy coverage is exhausted, you are eligible for coverage under your state’s Medicaid program without having to spend down all of your assets. For example, most states require you spend-down to $2000 ($3000 in MN, $1500 in Ohio and $999 in Missouri) before you qualify for assistance. With the partnership law, it allows you to protect a dollar-for-dollar match plus the allowed spend-down amount. For example, if you had $200,000 of coverage of insurance and exhausted all of those funds because of your care costs, the state will allow you to protect $200,000 of assets, plus the $999, $1500, $2000 or $3000 allowance (depending on your state) and then qualify for assistance.  Every state has slightly different rules of what your policy needs to include to be "partnership qualified".  For example, depending on your age, you may have to purchase a higher inflation protection with your policy (3% to 5% compound interest is typical). The reason for this is your State wants your benefits to keep up with the cost of inflation. Talk to your agent to determine what is required in your state.

NEWS!: A total of 17 states have approved lower inflation rates to qualify for their state Partnership Program. Some are as low as 1% which can lower your premiums while giving you the partnership protection. These states include: AL, AR, AZ, CO, FL GA, KS, LA, MN, ND, NE, NH, NV, TN, TX, WV, and WY. These changes as of 9/ 1/2015.

Do You Qualify?
Many people wait too long, have health problems, and then will not qualify for long-term care insurance. Why not find out? There is no cost nor any obligation to talk with a licensed agent. On-line presentations and in-person meetings are available without cost. Fill out the form below to request assistance with this important decision. Not everyone qualifies! Some wait too long to consider this type of insurance and won't qualify. If this is you, please visit our Alternatives to Long-Term Care Insurance page.

According to the American Association of Long-Term Care Insurance, the decline rate is as follows:

Your Age & Percent Declined
Below Age 50;  11%
50-59;  17%
60-69;  24%
70-79;  45%
80 and over  above 71%

Are My Insurance Premiums Tax Deductible?
Premiums for “qualified” long-term care insurance policies are tax deductible to the extent that they, along with other unreimbursed medical expenses (including Medicare premiums), exceed 10% of the insured’s adjusted gross income or 7.5 percent for taxpayers 65 and older.

Individual taxpayers can treat premiums paid for tax-qualified long-term care insurance for themselves, their spouse or any tax dependents (such as parents) as a personal medical expense.

As you age, your tax-deductible amount increases. Here are the 2018 & 2019 guidelines established by the IRS:

Age Per Individual and Per Couple (2020 Guidelines)

40 or under: $430 per individual and $860 per couple.
More than 40 and up to 50:  $810 per individual and $1,620 per couple
More than 50 and up to 60:  $1,630 per individual and $3,260 per couple
More than 60 and up to 70: $4,350 per individual and $8,700 per couple
70 and older: $5,430 per individual and $10,860 per couple

 Age  Per Individual and Per Couple (2019 Guidelines)
 40 and under:  $420 per individual $840 per couple
 41-50:  $790 per individual  $1580 per couple
 51-60:  $1580 per individual $3160 per couple

61-70:  $4220 per individual $8,440 per couple
 71 and above:  $5,270 per individual  $10,540 per couple

Once you begin collecting your benefits, typically benefits are received tax-free!  Benefits from reimbursement policies, which pay for actual services, are not included as your income. Benefits from per diem or indemnity policies, which pay a predetermined amount each day or month, are not included as income except in amounts that exceed $360 per day.

Wall Street Journal has a Frequently Asked Questions article dedicated to long-term care insurance and tax benefits:

What is Long Term Care Insurance?
Long Term Care Insurance helps pay for medical and non-medical care to meet health and personal care needs.  Long-Term Care is defined as needing assistance with the activities of daily living such as: bathing, eating, dressing, toileting, continence and transferring or if you need supervision due to a cognitive impairment. This "assistance" you need can be either hands-on or stand-by assistance.  Most insurance plans require that you need help with at least two of the six activities of daily living (ADLs), unless it's cognitive impairment, in which you would not need to meet this requirement. Older policies may state three of six ADLs need to be met.

What are the Chances?
70% of us will have a long-term care need in our lives after turning 65. Recent studies done by the Department of Health & Human Services say that figure may be closer to 79%, especially for women. But when you think about it, we can have a need for care anytime in our lives, in fact over 40% of the people currently needing care is under the age of 65.  Our Federal and State governments recognize long-term care as a severe issue and has issued incentives like tax deductions, tax credits, making you aware with the "Own Your Future" campaigns for awareness, and most States now offer the "Partnership" plans to reward individuals that have purchased long-term care insurance. Partnership plans allow you to protect an equal amount of assets equivalent to the total amount of your long-term care insurance policy. Read more below.