Accountants Should Help Clients Financial Impact of Long-Term Care

Financial professionals, like CPAs, should understand the impact of future long-term health care. Long Term Care Insurance can help protect someone's 401k and other assets from the rising cost of long-term care.

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Accountants Should Help Clients Financial Impact of Long-Term Care
3 Min Read July 11th, 2015 Updated:January 27th, 2023

Many people, including financial professionals, are unaware of the implications and importance of preparing for the costs and burdens of aging. Often accountants see firsthand the financial impact long-term health has on their clients. Usually, their clients are totally unprepared for the high cost of care. 

Accountants can also help their clients take advantage of tax incentives available with Long-Term Care Insurance. For those already needing care, tax deductions for care expenses can be claimed for medical expenses and for qualified long-term care services. Home care expenses associated with medical or nursing services may be partially deductible, including insurance premiums for long-term care and related expenses at home. 

In addition, specific medical devices may qualify for a medical expense deduction, such as a stair lift or bathroom safety equipment. Accountants can advise clients on filing applications for Medicaid, Social Security, and other government programs providing assistance with long-term care. 

Planning Should Happen Before Retirement

Planning should happen before someone retires when they have the most affordable options. Accountants should be aware of long-term health care's impact on their client's savings, investments, and future retirement income. Today, many seek help from qualified Long-Term Care Insurance specialists to help shop for and design affordable coverage to safeguard income and assets from these rising costs.

An article in Accounting Today, a trade publication, suggests CPAs address the financial threat of the high costs of long-term care.

The article 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."

Henry Montag, an independent Certified Financial Planner from New York, notes an individual may be able to deduct the entire premium or a part of it. Some states, including New York, have tax credits or deductions available for those with Long-Term Care Insurance. 

Business owners have additional benefits. He notes that 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.

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.

Partnership LTC Policy with Dollar-for-Dollar Asset Protection

People who live in one of the many states that offer Partnership Long-Term Care Insurance policies have additional dollar-for-dollar asset protection available. 

The Long-Term Care Partnership Program is a collaboration between the 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 health care. 

What Is the Partnership Program in Long-Term Care Insurance?

Long-Term Care Impacts Families and Finances

While long-term care is a significant cash flow issue, the consequences on loved ones can be considerable. The impact can be both emotional and financial. Emotionally, adult children may be overwhelmed with the responsibility of caring for a parent and all of the associated demands, such as managing doctor's appointments and paying caregivers. 

There may also be a sense of guilt or anger at taking on such a burden. Financially, adult children may experience stress trying to cover the high costs of long-term health care and attempting to cover their own financial obligations. This can be incredibly overwhelming if the adult child has a spouse and their own children. 

Experts recommend using a Long-Term Care Insurance specialist who understands underwriting, policy design, and claims. Specialists will often work with CPAs and other financial professionals to develop appropriate plans.

Most people get coverage in their 50s to take advantage of better health and lower premiums.

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About the Author

Linda is a former journalist who now enjoys writing about topics she is interested in so she “can keep her mind active and engaged”.

LTC News Contributor Linda Maxwell

Linda Maxwell

Contributor since December 11th, 2017

Editor's Note

Do you have a strategy to improve your quality of life as you age? Have you given this any thought at all? Too many people avoid the consequences of aging.

If you are in your 40s or 50s, take action now.

  • See your doctor annually

  • Be sure to get complete blood work, including a comprehensive metabolic panel 

  • Don't ignore colonoscopies and other recommended testing

  • Complete a will, including a living will

  • Discuss aging with your family

  • Contribute to your employer's 401(k) or other retirement plans

  • Add Long-Term Care Insurance to your plan

Most people get Long-Term Care Insurance in their 50s. The younger and healthier you are, the more affordable a policy will be. Delaying will make it more difficult to get coverage and increase the cost.

An LTC policy will ensure you have access to quality care services, including home care. When you have the resources to pay for quality care, your family can concentrate on being family instead of becoming caregivers.

Professional Help to Ensure You Have the Right Plan

There are several top-rated insurance companies that offer long-term care solutions. Each insurance company has its own underwriting standards, and premiums can vary over 100% between insurance companies. LTC Insurance is custom designed. A qualified Long-Term Care Insurance specialist will match you with the best company to save you money. A specialist will put together accurate quotes from all the top companies based on your age, health, family history, and other factors.

Get Accurate Answers Long-Term Care Questions

LTC NEWS has many tools and resources. These resources can help you in your research as you prepare for your future retirement and plan for the costs and burdens of aging and declining health.

Parent’s Health Declining? Do They Need Care Now?

Get quality care for your parent or parents if they require it. LTC NEWS can assist. We've put together a few comprehensive guides to help you along the way.

Find help locating quality caregivers or long-term care facilities and get recommendations for a proper care plan, whether a person has a policy. - Filing a Long-Term Care Insurance Claim.

These four guides can be very helpful as you try to find appropriate long-term care services for a loved one:

If your loved one is fortunate enough to have Long-Term Care Insurance, make sure they use it. Families may wait, believing that they can save the benefits for a rainy day. It is not a good idea to put off using available Long-Term Care Insurance benefits.

Today's Reverse Mortgages Can Benefit Older Families

Some people have a large portion of their savings in their homes. With the help of reverse mortgages, you can find ways to pay for quality in-home care, pay for LTC Insurance, and even assist with cash flow during retirement.

Yes, today's reverse mortgages may be the perfect way to pay for a Long-Term Care Insurance policy or even cover the cost of in-home care if you or a loved one is currently in need.

Asking an expert with your questions will help you learn more. Mike Banner, a columnist for LTC NEWS and the host of the television program "62 Who Knew," will respond to your inquiries about long-term care, reverse mortgages, aging, and health.

- Just "Ask Mike." - Reverse Mortgages | LTC News.

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