Long Term Care Insurance
Estate Protection 101
So how much does long term care insurance cost? The cost of a long term care insurance policy in Minnesota will depend on your age and health history. Females typically live longer so their premiums are usually higher. The longer you live, the more likely you will eventually need long term care.
Insurance companies determine the cost of long term care insurance by age. According to data from the American Association for Long Term Care Insurance, a policy valued at $165,000 equates to the following annual premiums on average in 2021:
* Rates reflect the initial benefit amount valued at $165,000
14 Facts about purchasing traditional long term care insurance.
- After age 65, you have a 70% chance of needing some form of care.
- A private nursing home room in Minnesota can cost up to $156,859 per year.
- A home health aide working 44 hours per week will cost up to $82,940 per year.
- Alzheimer’s disease is the leading cause of long term claims for people over the age of 65. However, nervous system disorder is the leading cause for people under 65.
- 40.2% of claims start at home.
- Best time to purchase long term care insurance is under age 65.
- Traditional long term care insurance is typically 30% less expensive than hybrid long term care insurance/ life insurance.
- #1 statement from clients “I will kill myself before I go to a nursing home”.
- Fact, you must spend down your estate to $3,000 before the state will pay for your care.
- Minnesota has a look back period of 5 years with a penalty for people who sell assets below fair market price, transfer assets to others, or give money and property away. Minnesota considers anything owned as an asset, barring exemptions.
- Minnesota Long Term Care Partnership Program allows you to protect all your assets dollar for dollar when you purchase a qualified long term care insurance policy. As an example, if your qualified long term care insurance policy pays out $400,000 dollars, you then will be allowed to keep up to $400,000 and then qualify for the state Medicaid program to pay for your care.
- Medicare health insurance will only pay for 20 days of rehabilitation in a skilled nursing facility after a 3-night stay in a hospital. For days 21–100, you will pay up to $194.50 coinsurance per day. And for days 101 and beyond, you pay all costs. You must continually improve each day. Once you plateau, your care ends.
- Average stay in a nursing home is 2.5 years.
- A qualified long term care insurance policy is triggered when your doctor certifies your illness is going to last at least 90 days and that you cannot do two of the six activities of daily living (eating, bathing, dressing, toileting, transferring or incontinence). Or your policy can be triggered because of a severe cognitive issue.
Long Term Care Insurance
The difference a Long Term Care Partnership Policy could make
Following is a hypothetical example of how this Partnership program benefits the policyholder and the family:
For example, Bob buys a Partnership-qualified private long term care insurance policy, and he ends up needing long-term care services down the road. His Partnership policy pays out $100,000 in insurance benefits for his care. Through the Partnership Program, Bob earns a Medical Assistance asset disregard that permits him to keep an additional $100,000 over the asset level he would normally have to meet in order to qualify for MA coverage. After Bob’s eventual death, the Partnership Program also protects those assets from MA estate recovery.
Without a Partnership policy, MN requires a spend down to $3,000. (Asset limits may vary by state.)
With a Partnership policy, you can protect more of your hard earned assets.
A 65-year old today has a 70% chance of needing long term care services at some point during their lifetime.
Additional Tips to consider . . . .
Are you in a second marriage?
Should your significant other need long term care, your assets are considered community property and must be used to pay for their care. Protect what you have by purchasing long term care insurance for your significant other. Protect your assets so that you can pass them down to your heirs. Hybrid life insurance policies can be a great alternative to traditional long term care insurance policies. Certain hybrid life policies will pay you tax-free cash giving the policyholder total control over what kind of care they want and get.
Most clients want to remain at home and have friends and family care for them. Only certain long term care life insurance hybrid policies that pay cash will allow for this type of care. You can even have your care on a cruise ship if you want. So, is a Cruise Ship Retirement cheaper than an Assisted Living facility?
Do you own a business?
C-corporations, non-profits, & self-employed business owners may have certain tax advantages when it comes to paying for long term care insurance premiums. If you are a business owner and want to consider a purchase of long term care insurance, call us now.
Other Insurance to Consider
Traditional policies will only reimburse you for qualified expenses. Qualified expenses are typically based on the services of a licensed professional. Best of all, if you do not ever need long term care, the hybrid life policy will pay a tax-free death benefit to your designated beneficiary. The death benefit will be many times higher than the premiums you put into the policy.
Purchase Long Term Care Insurance when You are Young and Healthy
Purchasing long-term care insurance while you are young enables you to lock in the rates. Your rates will not go up because you are getting older, so you will pay the same long term care insurance cost at age 70 as the one you lock in at 45.
Rates potentially may increase if the insurance company and the Minnesota Commerce Department determine rates must rise for that particular plan. You can even purchase paid-up policies. Once a policy is paid up, you can never get a rate increase. Return of premium is also available on certain long-term care insurance policies.
It makes total sense to purchase long term care insurance while you are healthy. If you have health issues, we ask that you be open with us. We can help put you in the best position to be approved for coverage by the insurance company.
Even if you have been denied long term care insurance in the past, give us a call. We may be able to help.
We have lots of different options available for your consideration. Certain discounts may be available for long term care insurance that can bring your premium rates down substantially.
If you are married or have a significant other, rates can drop by 15% by simply having a significant other living with you. When both apply and take policies, rates can drop by 30%! Good health can also lower your long term care insurance premiums by 15%. Other discounts include paying annually versus monthly.
Protect Your Estate from the Medical Assistance (Medicaid) Spenddown
Protect Your Estate from the Medical Assistance (Medicaid) Spenddown By purchasing a traditional long term care insurance policy, and assuming it is set up correctly, your estate can keep additional assets protected from the Medical Assistance (Medicaid) spenddown. Protected assets are also shielded from Medicaid’s asset recovery program. We strongly encourage you to read more on making sure your LTC policy is set up correctly, and what the Medical Assistance program requires when setting up a traditional policy.
In other words, you can protect assets in the same amount that your long term care insurance policy pays out. Without this protection, the person needing care will spend down their portion of the estate until they have just $3,000 left to their name. The Minnesota Department of Commerce also has its own requirements when purchasing a traditional long term care policy.
Minnesota Long-Term Care Insurance Credit
What is the credit? The Minnesota long term care insurance credit offsets the cost of long-term care insurance premiums by providing a credit against state income tax liability. The maximum Minnesota credit is equal to the lesser of $100 or 25 percent of the amount paid for each beneficiary. The maximum total credit is $200 annually on a joint return or $100 for individual filers
To claim the Minnesota long term care insurance tax credit you must complete Schedule M1LTI, Long-Term Care Insurance Credit. Include this schedule when you file Form M1, Individual Income Tax. For more information, see Minnesota Statute 290.0672.
You may claim the Long-Term Care Insurance Credit if you purchase insurance to provide long-term care coverage for yourself or your spouse, such as nursing home coverage. To qualify, both of the following must be true: The policy has a lifetime benefit limit of $100,000 or more. The policy you purchased qualifies as a federal deduction (disregarding the 7.5 or 10 percent income test). For more information, see Internal Revenue Service Publication 502, Medical and Dental Expenses.
Read more on how to get your credit https://www.revenue.state.mn.us/long-term-care-insurance-credit
Long Term Care Cost Estimates in Minnesota
There are many different types of long term care services available. Costs can vary depending on location. See the chart below for some cost estimates across the state.
*Annual Long Term Care Costs in Minnesota – 2021
*Cost of Care Survey 2021 (Genworth.com) cite referenced June 1, 2022
One Final Thought....
We are here to help you. We specialize in Long Term Care insurance plans.
LTCIA has many decades of experience collaborating with the best carriers in the business while working with a wide variety of customers from all walks of life. We can help you get the answers you need to all your questions and concerns.
We can carefully guide you through this entire process so at the end, you can comfortably make the best decision that best serves your specific needs and circumstances. So, give us a call. We would appreciate the opportunity to offer our professional guidance.
You owe it to yourself and your family. Get your free Long Term Care Insurance quote today!