Insuring long-term care

Touted as the best new health care benefit in the early 1990s, long-term care insurance can assure individuals their assets are protected should long-term care be required.

Thomas P. Wagner, president of Accelerated Financial Planning Services in Columbus, says the best candidates for this insurance are people aged 55 to 70 who have $100,000 or more in assets.

“Average long-term care costs about $4,500 a month,” says Wagner. “That’s $54,000 per year,” with an average stay of about two and a half years.

The policies offer tax benefits as well — since 1996, long-term care health insurance policies are tax deductible, says Wagner.

Individuals can deduct 7 1/2 percent of their medical expenses (which includes premiums) over $1500. Employers that provide long-term care insurance to employees can deduct the cost of the premiums dollar for dollar.

“Employers can take the tax deduction and the employees receive the benefits,” Wagner says.

Employers can offer different types of plans. A group rated policy is cheaper, but may not be portable — employees may not be able to continue coverage after they leave the company. The long-term care insurance carrier tracks the experience of group-rated plans and raises rates based on this experience.

In another type of plan, the employee pays the premiums but the employer receives a 15 percent discount on costs because it receives and pays one bill, listing those who are covered. This type of plan is never experience rated.

Wagner says top executives should also consider purchasing long-term care insurance that offers a return of premium feature — if the insured dies before using the plan, the premiums are returned to the family or estate.

“The tax benefits are twofold in this case,” Wagner says. “If he or she purchases a $200,000 policy and pays the premium in a lump sum, he or she gets the tax deduction on the premium, and if he or she dies before using the plan, that money is returned tax-free to his or her heirs.” How to reach: Thomas P. Wagner, Accelerated Financial Planning Services, 444-2330 or