Long Term Care Costs Cause Problems to Insurers

Long term care insurance companies had the answer to skyrocketing cost of long term care thirty years ago. But this time around, insurers think that long-term care insurance is not that affordable anymore. They pitched long-term care insurance as a prudent way for Americans to pay for long term care services likes adult day care, assisted living facilities, nursing homes and CCRCs.  But carriers discovered today that this type of policy is squeezing their earnings. 

Companies have higher payout nowadays since people are living much longer and thus more people will file for claims and will stay in long term care facilities.  In order to cope up with their losses, carriers impose higher premiums. People are expected to turn to Medicaid, a government program that helps cover the cost of long-term care.  

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Millions Expected to Forego Long Term Care Insurance Tax Deductions

Millions of people are expected to forego a few hundred to a few thousand dollars as tax deductions for long-term care insurance policyholders. Leaders of ACSIA Partners found out that this is due to different psychological obstacles. 

This tax deduction incentive is too good to pass up. Below you can find the limitations under Section 213(d)(10) of the IRS tax code, about eligible long term care costs includible in the term “medical care:”

Attained Age Before Close of Taxable Year / Limitation on Premiums:

40 or less: $380

More than 40 but not more than 50: $710

More than 50 but not more than 60 $1,430

More than 60 but not more than 70: $3,800

More than 70: $4,750

ACSIA partners come up with the conclusion that people pass up the tax deduction incentive because they are not aware of these deductions. With greater knowledge, more people will surely take advantage of long-term care insurance tax deductions.

Source: https://www.ltcoptions.com/tax-puzzle-millions-expected-to-forego-deductions-as-high-as-4750-for-long-term-care-insurance/

Which Generation Struggles in Retirement Savings?

Due to our constantly changing world and needs, millennials, baby boomers and generation x are continuously facing challenges and one of them is money issues. There is a new study that finds each generation is in a moment of dramatic change in terms of their financial well-being and retirement planning. Take a look at how each generation fairs in today’s economy.

1. Baby boomers

They have an average financial wellness score of 5.7 out of 10. About 29% say they are confident that they can replace at least 80% of their income in retirement, while only 16% have long term care insurance policy.

2. Generation X

This generation has made significant improvements when it comes to their finances in recent years but they are still most likely overwhelmed with financial stress. Only 17% say they are confident that they can replace at least 80% of their income in retirement.

3. Millennials

They have an average financial wellness score of 4.6, the lowest among all generations. However, they will most likely contribute to either Roth 401(k) or Roth RIA. Despite being the only generation not to prioritize retirement planning, they still have time to prepare for this. 

Source: http://www.cheatsheet.com/personal-finance/which-generation-is-worst-at-saving-enough-for-retirement.html/?a=viewall

How to Prepare for Long Term Care Costs

Many of us dream of having a comfortable life after retirement and living independently in our own home. However, most people will not have that kind of retirement since 70% of Americans 65 and above will require any form of long term care services, according to the U.S Department of Health and Human Services. 

Most Americans don’t anticipate this pressing need, which results into relying on loved ones, government programs like Medicaid and self-funding. In order to avoid these, here are some things you can consider when preparing for possible long-term care expenses:

1. Know the options
2. Consider costs
3. Understand Medicare & Medicaid
4. Decide how to pay
5. Don't put it off

Source: http://www.thedailymeal.com/ways-prepare-possible-long-term-care-costs

Spend Your Money Wisely

A lot of people commit this mistake nowadays. They don’t slow down spending their money since they can now afford to spend more. An increase in income should persuade you to increase your contributions in Social Security or savings plans and purchase insurance products so that you can protect your assets and as well as your loved ones when you start receiving long-term care. Around 70% of Americans 65 and above will require this type of care and thus the need to increase your retirement income or purchase coverage. Getting covered is significant today since it helps pay for the soaring cost of nursing homes, assisted living facilities, CCRCs and other long-term care facilities. To help you spend your money wisely, visit https://www.ltcoptions.com/learn-the-basics/how-can-you-pay-for-long-term-care/long-term-care-insurance/ to learn more information on insurance on long term care.