As part of its WealthAdvisor section, the Wall Street Journal published a column today featuring LTC specialist Bill Comfort's advice for how to find an independent, qualified LTC insurance specialist.
CLICK HERE to link to the article - it may require a subscription to read the full article.
From the article:
"Long-term-care insurance, as you’re probably aware, is a ridiculously complicated product, one that comes in many shapes and sizes. As such, an independent agent—one who sells policies from multiple carriers and who specializes in long-term-care planning and insurance—can help you navigate these waters.
"What you don’t want, says Bill Comfort, a long-term-care insurance specialist in Durham, N.C., is someone who jumps immediately into policy features and premiums. Rather, you’re looking for an adviser who, first, takes time to understand your situation and needs and, second, can explain how various types of coverage might help."
I don't know about you, but if you're a 50-something like me you may be getting bombarded with social media "sponsored" posts about LTC insurance and how the "NEW KIND" of policy is so much better than the "tired, old, broken-down LTC insurance" because if you never need care, you won't "waste" your premiums.
It's NOT true! Don't fall for a clever and misleading marketing pitch to get you to over-pay for benefits you don't need!
The IRS just released its annual inflation adjustments for tax year 2021. (Revenue Procedure 2020-45)
This includes the amount of LTC insurance premiums which are considered deductible health insurance premiums (the "Eligible Premium") and the tax-free benefit amount for "cash benefit" indemnity plan payments - what the IRS calls "per diem" plans.
FOR CLAIMS IN 2021 with a "cash benefit" or indemnity (per diem) policy the minimum tax-free benefit increases to $400 per day ($12,167/month).
(This is a $20/day increase from 2020 which was $380/day.)
FOR PREMIUMS PAID IN 2021 the amount of tax-qualified premiums paid based on your age at the end of the tax year (on 12/31/2021) are considered a deductible medical expense up to the following age-based, "Eligible Premium" limits:
NOTE that most taxpayers will not be able to realize any deduction as you must first be able to itemize deductions on Schedule A, have total un-reimbursed medical expenses including the LTC Eligible Premium that exceed 10% of your Adjusted Gross Income (AGI), and only the amount above the 10% threshold is deductible.
HOWEVER, if you have funds in a Health Savings Account (HSA) - or an employer-funded Health Reimbursement Account (HRA) - you CAN use those tax-free dollars to pay tax-qualified LTC insurance premiums up to the age-based, Eligible Premium amount shown above for yourself and a spouse.
BUSINESS OWNERS (and spouses) get to take the age-based, Eligible Premium deduction "above-the-line" on Form 1040, as part of the "Self Employed Health Insurance Deduction" (Form 1040, Schedule 1, Line 16). This applies to owners of business incorporated or taxes as: Sole Proprietorships, Partnerships, or S-Corporations. (Shareholder/Employees of a "regular" C-Corporation can have the entire premium deducted - without limit - if paid as an employee benefit by the corporation.)
CLICK HERE TO LEARN MORE ABOUT BUSINESS DEDUCTIONS FOR LTCI AND TO SEE THE 2020 LTC TAX GUIDELIENS COMPARED TO 2021.
* The tax information presented here is for general information only and should not be used nor relied upon as specific tax advice. Taxpayers should consult with their CPA or qualified tax professional for advice regarding their own tax situation and the tax status of LTC premiums and benefits.
"Chronic Illness" riders on life insurance are NOT the same as real LTC insurance. There is an explosion of these "living benefit" riders being added to life insurance policies with NO standardization as to what "Chronic Illness" means or how the benefits get paid.
Some of these "Chronic Illness" riders may look a lot like real LTC insurance - an agent may even tell you, "It's just the same as LTC insurance." But it is not.
If you're goal is planning for extended, long-term care needs and an agent only shows you one of these riders you must find another agent!
CLICK HERE to read an outstanding article on some of the problems with "Chronic Illness" riders by my colleague, Kerry Peabody.
"If you need a plan to pay for LTC, you’re better off with a policy specifically designed to do that. When you’re actually planning to meet your LTC needs, a Chronic Illness rider isn’t a plan, it’s an afterthought."
Request a copy of our updated 2020 Consumer Guide to LTC Insurance
The Hybrid LTC Information Center
ComfortLTC.com has added a new resource for consumers and financial advisors regarding "hybrid" or "linked-benefit" LTC insurance. Articles include:
As a truly independent brokerage agency specializing in extended care planning and LTC insurance, Comfort LTC fairly represents ALL types of LTC insurance - Traditional LTC and all the many different Hybrid LTC variations.
Do not ever buy LTC insurance from an agent or advisor who only sells one type of coverage (or represents only one or two companies) - they cannot represent your best interests. CLICK HERE for our guide to finding a truly independent LTC specialist.
Check out this article about a FL CCRC with a $1.5-million+ entrance fee!
Then read our exclusive report on creating your own "Private CCRC Plan".
A Comfort LTC Exclusive:
Hybrid (or "linked-benefit", "combo" or "asset-based") LTC insurance options are exploding in the marketplace, and they are NOT all created equal.
Are "hybrid" LTC policies with a death benefit really a better deal?
You'll be surprised at what our analysis shows, and why you need to make sure you know ALL your options before you buy LTC insurance.
The new Comfort LTC Hybrid LTCI Information Center will provide clear explanations of the many different types of plans along with detailed case study analysis to provide real-world examples and comparisons.
A recent on-line column at Advisors Perspective attempts to provide an objective framework for conducting a long term care insurance analysis in a financial planning practice. It fails on several levels.
The article, “Evaluating Long-Term Care Insurance”, published February 24, 2020, and written by Allan Roth is hardly a comprehensive view of the subject, and it needs to be viewed with limited applicability.
I find it to be only partially researched, inconsistently analyzed, and overly opinionated.
Too many financial advisors inappropriately seek to value insurance products using an investment analysis model. While there are certainly cash-flow and cost of money considerations, as noted above insurance is purchased with an expectation of “losing” a little in exchange for potentially protecting a lot. And there are “soft”, subjective considerations that are also routinely ignored, but that often create the biggest value in having coverage when the risk event occurs.
The state of Washington has passed the first of its kind government-run LTC insurance program for working residents of the state.
The plan will provide $100 per day of benefits which will increase with inflation for a maximum of 365 days (1-year). Each day of benefits is considered a "unit" of coverage and units can be combined to pay for care services above $100/day, but that would also shorten the total benefit period. The benefit can be used to pay family members to provide care after they have completed a minimum amount of mandatory training.
Every employee in the state will have a payroll tax withholding to pay for the plan. The tax is 0.58%, or $0.58 for every $100 in payroll income. A person earning $4,000 per month would pay $23.20 per month.
The plan does not cover people already retired or who will retire in the next 6 to 10 years. It also is not portable if an employee leaves the state of Washington.
Payroll deductions will not begin for 3 years, and no benefits will be paid for at least 3 years after that as the plan requires that employees pay in for a minimum of 3 of the previous 6 years to be eligible. To be fully "vested" in the plan an employee must pay in for at least 10 years.
"Self employed" people will not be automatically covered, but can opt-into the plan at the same payroll tax rate.
Employees who have private LTC insurance can opt-out of the tax and coverage.
Read more details by clicking here:
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