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There is a strong likelihood that you or someone you know will have a need for long-term care. According to the Department of Health and Human Services, two out of three people will eventually require some kind of nursing, home health, or assisted living care. With longer life expectancies, an individual faces an increasing chance for a long-term care need.

Long-term care includes a variety of needs and conditions, such as help with activities of daily living, cognitive impairments, and chronic issues. Long-term care can be both permanent and temporary conditions. However, any LTC situation can significantly inhibit your quality of life and threaten your financial stability during retirement.

Things like Medicare and Medicare supplemental policies (“Medigaps”) may cover some of the costs associated with a long-term care need, but this is typically in temporary conditions and under very strict guidelines. This is where a long-term care insurance policy comes into play. 

Although some people see long-term care insurance as luxury to compliment their overall retirement plan, it is a powerful tool to protect your financial and health wellness. Long-term care, even in short instances, not only places your health at risk but can exhaust the resources you have diligently accumulated for your retirement.

Long-term care coverage guidelines will vary based on carrier, policy, and individual. However, most LTC contracts generally cover items such as:

  • Nursing home care
  • Home health and visiting nurses
  • Costs associated with assisted living
  • Assistance with activities of daily living

In addition to protecting you and your assets against a debilitating medical situation, long-term care insurance can also provide tax benefits. Premium payments for a qualified LTC contact may be applied toward the medical expense floor on your tax return. In general, the benefits received from a qualified LTC policy are not taxable, up to a per diem maximum.