Safeguarding Clients from Long Term Care Costs
By Linda Maxwell
A recent article in Accounting Today, a trade publication, suggests CPA's deal with their client's financial threat of the high costs of long-term care.
The article, written by Henry Montag, an independent Certified Financial Planner from New York, says having a long-term care insurance contract "will not only provide their client with the dollars necessary to pay for some or all of the expenses associated with their care, but will provide them with independence and peace of mind, knowing they’ll never be a burden to their kids or spouse".
Montag also notes an individual may be able to deduct the entire premium or a part of it. At a minimum most states have a 20 percent state tax credit for any individual. This is also one of the few times that an insurance benefit can be paid for on a totally discriminatory basis, i.e., for all officers and spouses, and then be taken as a 100 percent deduction in various corporate settings.
He adds, "In my opinion a client should consider purchasing a long-term care insurance contract in their mid to late 50s, when their youth and good health will allow them to purchase this valuable protection at a lesser cost," Montag said.
A comment on the online article from a Long Term Care Specialist says, "Most states have partnership programs available which provide dollar for dollar asset protection if you have a qualified policy."
The Long-Term Care Partnership Program is a collaboration between state government and insurance companies. Under this partnership, applicants who purchase qualifying long-term care insurance policies can access Medicaid coverage while retaining assets they would normally be required to spend on their long-term care. This is referred to as dollar for dollar asset protection.
The comment goes on to say, "This, for many people, is a very important added benefit along with case management and other services that make affordable Long Term Care Insurance policies very valuable. Many people should make this part of their retirement plan."
They add that premiums are very affordable if designed appropriately by a specialist who understand how these plans work.