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  3. Long-Term Care Insurance May Help Offset Medical Costs

Long-Term Care Insurance May Help Offset Medical Costs

Submitted by Shoemaker Financial on September 19th, 2018
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Analysts say couples will need an estimated $280,000 to cover health-care costs in their retirement. That’s a 2% increase from last year’s estimate.[1]

Recent research paints a bleak financial picture of retirement for many Americans.[2] More than 20% of Americans have no retirement savings and a third of baby boomers have less than $25,000 saved. A recent survey concluded that 78% of Americans are “extremely” or “somewhat” worried about having adequate resources to afford a comfortable retirement.

More Americans say they plan on relying on Social Security to fund their retirement.[3] Some experts predict Social Security will become insolvent by 2034 if Congress doesn’t provide additional funding.[4]

According to some estimates, if you started collecting benefits at the age of 62 and lived until the age of 90, you’d collect about $471,000.[5] Medicare typically covers 20% of your medical bills.[6]

Substract the estimated health-care costs by the total in Social Security benefts and retirees may be left with $191,000 over the course of their retirements.

Long-term care insurance may provide the bridge to help people pursue successful retirements. Here are some ways it may help you manage your finances in retirement.

 

  1. Cover costs associated with chronic illnesses

Long-term care insurance helps cover treatment costs for chronic diseases, such as arthritis, heart attacks, stroke, cancer, diabetes, and epilepsy.[7] Insurance, for example, may cover the costs for caregivers to help with bathing and dressing or stays at rehabilitative or assisted living facilities.[8]

Here are the average annual national costs for various types of elder care:[9]

  • Assisted living and memory care: $45,000
  • Nursing home: $82,855
  • Home care aide: $40,000

 

  1. Help fill coverage gaps

Long-term care insurance will also help retirees fill the health-care gap Medicare doesn’t cover.[10] Medicare typically pays around 62% of out-of-pocket health-care costs.[11] Private insurance on average pays about 13% of medical expenses. That leaves retirees 13% in out-of-pocket medical expenses.

Long-term care insurance works in conjunction with Medicare to fill those unforeseen coverage areas without affecting Medicare eligibility.[12]

 

  1. Receive a tax break from buying it

Tax incentives are available for those who buy long-term care insurance.[13] Federal and many state tax codes provide tax benefits to those who get care insurance. The Health Insurance Portability and Accountability Act of 1996 established provisions for favorable tax treatment for those with qualified insurance. For more information about qualified providers, go to http://www.aaltci.org/long-term-care-insurance/free-quote/.

The IRS allows taxpayers to deduct medical expenses that include the amounts they pay for long-term care insurance.[14] Taxpayers may not deduct premiums for long-term care insurance if the premiums were paid with tax-free distributions from retirement plans paid directly to insurance providers.

If you would like to discuss adding long-term care insurance to your plan or review your current policy, we’re more than happy to talk.

 

Securities and Investment Advisory Services offered through Securian Financial Services. Member FINRA/SIPC. Shoemaker Financial is independently owned and operated. Shoemaker Financial 2176 West Street, Suite 100, Germantown, TN 38138.  Neither Securian Financial Services, Inc. nor Shoemaker Financial are affiliated with Platinum Advisor Marketing Strategies, LLC.  No.  2208827 DOFU 08/2018

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any funds or stocks in particular, nor should it be construed as a recommendation to purchase or sell a security. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested.

Financial Advisors do not provide specific tax/legal advice and this information should not be considered as such.  You should always consult your tax/legal advisor regarding your own specific tax/legal situation.

These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative,

Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

By clicking on these links, you will leave our server, as the links are located on another server. We have not independently verified the information available through this link. The link is provided to you as a matter of interest. Please click on the links below to leave and proceed to the selected site.


[1] http://time.com/money/5246882/heres-how-much-the-average-couple-will-spend-on-health-care-costs-in-retirement/

[2] https://news.northwesternmutual.com/2018-05-08-1-In-3-Americans-Have-Less-Than-5-000-In-Retirement-Savings

[3] https://news.gallup.com/poll/211085/nonretirees-rely-social-security.aspx

[4] https://www.cnbc.com/2017/07/19/americans-plan-to-rely-more-on-social-security-but-it-may-be-insolvent.html

[5] https://www.fool.com/retirement/2017/04/30/heres-what-youd-be-paid-in-lifetime-social-securit.aspx

[6] https://www.medicare.gov/your-medicare-costs/costs-at-a-glance/costs-at-glance.html

[7] https://www.medicinenet.com/diabetes_mellitus/article.htm#what_are_the_chronic_complications_of_diabetes

[8] http://www.investopedia.com/ask/answers/09/long-term-care-insurance.asp?ad=dirN&qo=serpSearchTopBox&qsrc=1&o=40186&lgl=myfinance-layout

[9] https://www.payingforseniorcare.com/longtermcare/costs.html

[10] https://www.payingforseniorcare.com/longtermcare/resources/medigap.html

[11] https://www.fool.com/retirement/2017/04/03/even-with-medicare-seniors-may-need-up-to-350000-t.aspx

[12] https://www.medicareinteractive.org/get-answers/filling-gaps-in-medicare/understanding-long-term-care-insurance/long-term-care-insurance-and-medicare

[13] http://www.aaltci.org/long-term-care-insurance/learning-center/tax-for-business.php

[14] https://www.irs.gov/publications/p502#en_US_2017_publink1000178975

 

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Disclaimer

Shoemaker Financial is independently owned and operated and offers its own suite of products and services entirely independent of Securian. 

Certain individuals associated with Shoemaker Financial are registered with and offer securities and investment advisory services through Securian Financial Services, Inc. ("Securian"), a registered broker-dealer and investment adviser, member FINRA / SIPC. Individuals registered with Securian are authorized to offer only those securities and investment advisory services that have been specifically approved by Securian. FINRA's Broker Check contains additional information about registered individuals and also indicates whether they are registered representatives and/or investment advisor representatives. You may also refer to their individual bio pages on this website to find their registration status. Not all registered persons are registered as investment advisor representatives.  Only registered persons who are registered as investment advisor representatives use titles “advisor” or “financial advisor” and provide advisory services. For further questions about which individuals associated with Shoemaker Financial are registered with Securian, as well as information about which securities and investment advisory services such individuals are authorized to offer on Securian's behalf, please contact Securian at 1-800-820-4205. 

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