Long Term Care Insurance Increased Tax Deduction Limits Announced

The Internal Revenue Service (IRS) announced increased deductibility levels for individuals purchasing long term care insurance policies purchased in 2013.  
     

"For taxable years beginning in 2013, the limitations have been increased," explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance (AALTCI), the industry's trade association.  “Tax advantaged long term care insurance remains one of the few remaining significant tax-savings benefits especially meaningful for small business owners."

The deductible limits under Section 213(d)(10) for eligible long-term care premiums includable in the term ‘medical care’ are based on the taxpayers attained age before the close of the taxable year.  For those age 40 or less, the maximum deduction is $360 an increase from the 2012 amount ($350).  The maximum amount that may be deducted by an individual who is more than age 70 is $4,550, an increase from $4,370 in the prior year.

"The federal government and a growing number of states are offering deductions and in some cases even credits to encourage individuals to plan for the eventual need of costly long-term care," Slome explains.

According to the just released IRS Revenue Procedure 2012, the deductible limits range from a low of $360 to as much as $4,550 per individual.  "The deductions are especially meaningful at older ages when it is likely a couple will have lower income and potentially other medical expenses necessary to meet minimum thresholds," Slome explains.  "That said, people must buy long-term care insurance when they can still health qualify.  Tax deductions are a meaningful added plus to the potential of not having to depend on family members or spend your retirement income for care."

     
For calendar year 2013, the per-diem limitation under Section 7702B(d)(4) for periodic payments received under a qualified long-term care insurance contract is $320 (the 2012 limit was $310).
     

Established in 1998, the American Association for Long-Term Care Insurance is the national association focused on creating heighten consumer awareness regarding the importance of planning and serving insurance and financial professionals who provide long-term care financing solutions.  A complete explanation of long term care insurance tax deduction limits and rules for individuals and business owners can be found on the Association's website.

Long Term Care Insurance Association Kicks Off Membership Campaign

A national drive to educate thousands of insurance professionals about the importance of long term care insurance planning for their clients along with a membership drive will be launched.

“America faces a long term care tsunami as millions of people live into their 80s, 90s and even past 100 and very few have done any planning," declares Jesse Slome, executive director of the American Association for Long-Term Care Insurance.  The trade group, founded in 1998, is the leading organization supporting insurance professionals who market long term care insurance solutions.

"The past few years have witnessed many significant changes in the long term care planning landscape and our goal is to help bring people up-to-date with what's taking place and what they need to do to build more successful practices," Slome explains.

The national association will be conducting extensive producer education throughout the month of November including the holding of the national Long Term Care Insurance Producers Summit in Las Vegas.  "The Summit is the industry's largest national long term care insurance conference exclusively for insurance agents who market and sell solutions with over 500 attendees," Slome notes.

The Association will conduct a national membership drive as well.  "We provide exclusive benefits for members designed to help them generate more prospects and sales," Slome notes.  The Association maintains the nation's largest Long Term Care Insurance Online Learning Marketing Sales Center consisting of nearly 1090 training audios, marketing material that can be personalized and used by agents to get more long term care insurance leads and sales.  Membership in the organization is $98 per-year.

Established in 1998 as a non-profit trade group, the American Association for Long Term Care Insurance advocates for the importance of planning for long term care and supports insurance and financial professionals who market LTC insurance.  To learn more about long term care insurance costs call the organization’s offices at (818) 597-3227 or visit the Association’s website.

Long Term Care Insurance Rates Account For 2013 Change

The impact of the changing reserve requirements for long term care insurance has generally already been taken into account and isn’t expected to create further rate increases starting next year according to Jesse Slome, executive director of the American Association for Long-Term Care Insurance.

“We’ve had several recent calls from consumers after being told by a financial planner that rates for insurance would ‘increase significantly’ in 2013,” Slome explains.  “The new discount rate will have minimal impact on long term care insurance and in many cases has already been taken into account by insurers.”

According to Slome, the ‘valuation discount rate’ used for calculating statutory reserves or capital requirements for long term care insurance is dropping from 4 percent to 3.5 percent for new business starting in 2013.  “The rate is tied to Treasury yields based on a complicated formula,” Slome notes.  “It automatically updates when new money rates change over a period of time.”

Five-year Treasury rates are at historic lows (0.62%) and 10-year yields are at 1.59 percent as of September 4, 2012.  “By comparison, both five and 10-year rates were 4.68 percent on January 1, 2007 and 2.65 percent and 4.60 percent as recently as January 4, 2010.

“Low interest rates have been the primary cause of increasing rates for long term care insurance and have impacted other insurance lines including fixed annuities as well as life and disability insurance,” Slome states.  “To compensate for every one percent decline in interest rates which equates to lower investment income, an insurer needs a 10-to-15 percent increase in premiums.   The drop in just the past two years has had an enormous impact.”

The Association reports that the changing reserve requirements that take effect January 1^st are designed to provide added protection to policyholders.  “The half percent drop in reserve rates will have a nominal impact on premiums,” Slome.  “The impact depends on a policy’s duration but is in the two-to-five percent range.”

The American Association for Long Term Care Insurance was established in 1998 to advocate for the importance of planning for long term care and to support insurance and financial professionals who market LTC insurance.  To learn more about long term care insurancecosts call the organization’s offices at (818) 597-3227 or visit the Association’s website.

New Report Lauded By Long Term Care Insurance Industry Executive

The executive director of the American Association for Long-Term Care Insurance cited a new report that called further attention to the sever economic strain America’s aging population will place on federal programs such as Medicare and Social Security.

According to the report by the National Research Council and funded by the U.S. Treasury, there are options that can help the nation avoid what others call a very grim reality.  “As a nation we need to act sooner rather than kicking the can further down the road,” declares Jesse Slome, executive director of the nation’s long term care insurance industry trade group.  “Waiting will only make the matter worse and the cure that much more severe, and yet we seem to be willing to bury our heads and avoid what expert after expert predicts.”

The report notes that the aging of the American population will pose continuing economic challenges for the country for decades to come.  According to the report, the ratio of adults aged 65 and over compared with people aged 20 to 64 will increase by 80 percent in the coming decades.

Experts explain that the shift is partly the result of increases in average life expectancy which has risen from 47 years in 1900 to 78 years today.  According to Slome, life expectancy continues to grow and is projected to be 84.5 years by the year 2050.

“America is rapidly becoming an aged nation without a plan for dealing with the needs of our people and their families,” Slome concurs.  “Declining birth rates among younger people means a smaller proportion of the population will be under 65.”

The report mandated by Congress notes that while some people have saved amply for retirement, between one-fifth and two-thirds of today's seniors have not saved enough, leaving them to rely heavily on Medicare and Social Security -- programs that, along with Medicaid, now account for about 40 percent of all federal spending.

Medicare, Medicaid and Social Security account for roughly 40 percent of all federal spending and 10 percent of the nation's gross domestic product according to the authors of the report.   The report outlines strategies including increasing the retirement age beyond the currently accepted age of 65 years.   A second strategy called for workers to increase their savings in order to have more resources when they retire.

“We’ve called on both Presidential candidates to address the long term care problem facing aging Americans,” Slome notes.  “We believe tax incentives are a way to get more people to pay attention and to plan.  We praise the authors of this report and Congress for requesting the study but it’s time to take action, talking will not fix this problem.”

The American Association for Long Term Care Insurance was established in 1998 to advocate for the importance of planning for long term care and to support insurance and financial professionals who market solutions. To learn more about long term care insurance costs call the organization’s offices at (818) 597-3227 or visit the Association’s website.

Long Term Care Insurance Difficult To Get After Age 80

According to the U.S. Department of Health and Human Services some 5.5 million Americans were age 85 or older in 2010 with the number expected to grow to 6.6 million in 2020.

“Americans are living long lives but few have prepared for the consequences that come with living into your 80s, 90s and even past age 100,” declares Jesse Slome, executive director of the American Association for Long-Term Care Insurance, the industry trade group.  “When it comes to retirement planning, people get they can’t start preparing and saving for a comfortable retirement at age 60.  But, this is really the first generation to face the reality of living long lives and few have done any preparation for the consequences.”

The nation’s long term care insurance expert notes that after age 80 purchasing long term care insurance can be a daunting, almost impossible task.  “The major insurers have ceased offering coverage to those over age 80 because few people would agree to pay the premiums and even fewer could meet the health qualifications,” Slome explains.  “It is no different than trying to buy home owners insurance after your house has burned down.  You can’t get it.”

Several smaller insurers continue to offer long term care insurance policies to those over age 80.  “You can expect to pay $1,000 or more a month for coverage but considering you may be looking to get over $165,000 in benefits, that’s a considerable value,” Slome explains.  “But even those willing to pay this amount generally can not meet the health qualifications.”

“Long term care insurance is only available to those individuals who can health qualify,” Slome adds.  “This is done so to avoid having those who are in good health subsidizing rates for those who are in poorer health and are the ones most likely to begin claims sooner.”  Slome advises that the ‘sweet spot’ for looking into this protection is between ages 52 and 64.  “Do it before you qualify for Medicare and have access to preventative health screens that may uncover conditions which make it impossible for you to obtain long term care insurance or to pay higher premiums,” Slome concludes.

The organization maintains the nation’s most comprehensive website containing the latest data from Association conducted studies of buyers and claimants with long term care.  To learn more or to connect with one of the Association’s staff for long term care insurance costs, call the organization’s offices at (818) 597-3227 or visit the Association’s website.

Long Term Care Insurance Expert Shares Savings Tip

Roughly eight million American adults relocate to a new state and millions more have residences in two states; both situations that could reduce the cost for long term care insurance according to an expert.

“Rates for identical long term care insurance coverage can vary by 10 percent or more depending on where you reside,” explains Jesse Slome, director of the American Association for Long-Term Care Insurance one of the nation’s leading long termcare insurance experts.  Slome was answering a question for a Tennessee resident planning an imminent move to New York.

“A comparison of costs for a plan providing roughly $165,000 of coverage found that he would pay roughly 13 percent less if he waited to apply in New York,” Slome advised.  “We explained he needed to speak with a knowledgeable expert licensed in both states so he could learn of any important considerations.”

According to the Association while most insurance professionals are licensed only in the State where they do business a growing number of long term care insurance professionals who specialize in the product are available in multiple states.  “A growing number of specialists will consult with people over the phone, something which many prefer compared to an in-home appointment with an insurance agent,” Slome adds.

The Association compared rates for three leading insurers offering policies in multiple states.  “The cost for coverage from one company was about $910-per-year for a 55 year old living in New York but $1,035 for identical coverage for someone in Tennessee,” Slome notes.  “Insurance companies today tend to require some proof of residency,” he adds, “for example, they will base coverage on the state issuing your driver’s license.”

To connect with one of the Association’s professional members who are licensed in multiple states and able to provide free no-obligation long term careinsurance comparisons quotes and information on the topic all the organization’s national headquarters at (818) 597-3227 or visit the Association’s website.

Long Term Care Insurance Growth Anticipated As HSAs Gain Acceptance

A new report estimates that Health Savings Accounts (HSAs) have grown to over $14 billion in assets and the number of HSA accounts has increased to nearly 7.1 million.

“It takes a while for any new tax favored benefit to gain acceptance,” says Jesse Slome, executive director of the American Association for Long-Term Care Insurance.  “As more people have balances in their HSAs, we anticipate that more will use the funds to pay for long termcare insurance.”

According to data researched by Devenir an investment firm that specializes in providing investment options for HSAs, the average account balance for the first half of 2012 grew to $1,996 an approximately 10 percent increase over the prior year.  “Few people are aware that long term care insurance premiums may be paid from a Health Savings Account up to the IRS limits set each year,” Slome one of the nation’s leading long term care insurance experts explains.

For 2012 the Internal Revenue Service has established a limit of $350 for an individual age 40 or less and $660 for someone who is more than 40 but not more than 50.  “The average age when individuals start buying long term care insurance is mid 50s according to Slome one of the nation's leading long term care insurance experts.  “At younger ages the costs are lower and using a tax-advantaged HSA account to pay for some or all of the coverage is a tax-smart planning idea,” Slome acknowledged.

The Association notes that in recent years more small and mid-sized businesses have been offering long term care insurance to their employees on a voluntary basis.  “I’ll bet few know they can have employees use their HSAs to pay for this benefit,” Slome notes.  “But over time awareness will grow as will the number of people taking advantage of this protection.”  The growth of long term care insurance sales to small businesses is attributed to special tax incentives now being offered as well as access to discounts and some health underwriting concessions that vary from one insurer to another.

For more information, connect with a member of the American Association for Long-Term Care Insurance.  The organization serves the public by educating Americans about the importance of planning for the risk of needing long term care.  For additional information on long term care insurance costs or to connect with a specialist member of the Association call (818) 597-3227 or visit the organization’s website.