Long term care insurance cost is a major concern for many families. Unlike regular health insurance, which covers medical bills and physician visits, long term care coverage is designed to pay for nursing home stays and other types of long-term care costs.
There are a few things you need to know about long term care insurance cost before making a decision to buy the coverage. For starters, the policy must be a stand-alone policy rather than part of an insurance package, such as a life insurance or health care savings account (HSA).
The cost of a long term care insurance policy can vary depending on several factors, including your age and gender. In addition, your income and overall health play a role in your premiums.
If you want to lower the cost of your long term care insurance, it’s a good idea to consider purchasing a policy before you reach retirement age. This will allow you to take advantage of the tax benefit that gets more generous as you age.
Buying at a young age also gives you the best rates. For example, a single 55-year-old man who purchases an initial pool of benefits equal to $164,000 at age 55 and adds 1% of inflation protection can expect to pay an average annual premium of about $1,700.
This will give you a total of $386,500 in benefits at age 85. That’s a significant sum of money.
In addition, the cost of the policy can fluctuate greatly between now and then if you decide to change your mind or develop health problems. Those changes could result in a higher risk of needing long term care and lead to more expensive premiums.
A long term care policy may have an inflation rider that can increase your daily benefit by up to 3% each year. This can make a big difference in the amount of your long term care expenses.
Another way to reduce the cost of a long term care policy is by choosing a hybrid plan that blends traditional life insurance and long term care insurance. These policies are designed to earn returns, much like whole life insurance policies, but with the added benefit of long term care coverage, as well.
When you’re ready to purchase long term care insurance, it’s advisable to shop around and compare several policies. A comparison will help you find the best price and cover all your long term care needs.
The best time to purchase long term care insurance is before you reach retirement age, but this isn’t always an easy task. There are a few reasons why:
One is that premiums can increase dramatically the more time you delay enrolling in a long term care policy.
If you wait until after you turn 55 to get a policy, you’ll be facing a significant hike in the cost of your long term care policy.
However, if you buy your long term care policy now and keep it in force, you can still deduct the cost of your premiums on your taxes. In 2022, people ages 51 to 60 can deduct up to $1,690 of long term care insurance premiums as a medical expense; 61 to 70 can deduct $4,510; and those over 70 can deduct $5,640.