Long-Term-Care Insurance Available in APA Program

The most pressing financial concerns of many people tend to revolve around providing for their families, assuring adequate retirement income, and preserving their estates for the future. These are areas in which the APA Member Retirement Program has been offering services to members since 1990.

Few people, however, consider what would happen to their families, themselves, and their assets if they were to require long-term care due to a prolonged illness or disability. The APA Member Retirement Program has recently added long-term-care coverage to its list of services and products. In most cases discounts are specifically available to APA members and their families.

This new service includes personal counseling on how to choose the proper coverage and company for an individual’s particular circumstances. As part of the decision-making process, several insurance company proposals will be provided to members for both benefit and cost comparisons.

Premiums for long-term-care coverage can be paid personally, in which case they would be treated as a medical expense for purposes of itemizing a medical-expense deduction and subject to certain limits. You can also pay the premiums through your business, which would provide greater tax savings, since you can deduct the premiums without regard to the 7.5 percent of adjusted gross income threshold. Deductibility of premiums depends on whether you are self-employed, a sole proprietor, partnership, C or S corporation, and so on. In any case, however, benefits are received income-tax free. You may request a free tax-information booklet on qualified long-term care by calling the number below.

Admittedly, receiving a tax deduction as well as tax-free benefits for long-term care seems too good to be true. However, it is cheaper for the government to allow the tax deductions now rather than have to pay for future nursing home costs. Another compelling feature is that if you choose to purchase this important insurance coverage through your practice, you would not have to include your employees. Here are some additional facts to consider:

• Of Americans over age 65, 60 percent will need some long-term care in their lifetime; 40 percent will spend at least some time in a nursing home (Your Money, December/January 1999).

• The average cost of a nursing home stay is almost $56,000 a year, and it can run much higher in major metropolitan areas (Reuters, December 12, 2000).

• Skilled nursing care averages $105 a day and adult day care $60 a day; home care averages $80 a visit. Distance is also a problem. The majority of family members and their elders live at least 100 miles away from each other (CNN Financial Network, August 25, 1999).

When considering the purchase of this type of coverage, individuals should keep in mind that the best long-term-care policy is one that provides comprehensive benefits—covering all types of care, including at-home or adult day care, or care in an assisted-living facility or nursing home, as well as for mental disabilities. Benefits should be available for the care that is most appropriate for the individual’s long-term needs. The policy should also be adequate to cover the potential need, considering the daily amount and how long benefits may need to be paid. Another consideration, if it applies to the insured, is to secure coverage that will pay the benefits to the insured if at the time of the disability he or she is residing or visiting outside of the United States.

As with any type of insurance, the purpose of long-term-care protection is to safeguard individuals and their assets against catastrophic financial loss. Therefore, while the average length of stay in a nursing home is only 1.5 years, the average length of stay for chronic conditions (those lasting more than one year) is more than six years. That makes a policy with a longer benefit period more desirable.

The policy should also provide protection against inflation. Individuals should think about benefits that might be needed in 10 years, 20 years, or even 30 years, as well as what the costs could be compared with today’s costs.

Additional information, a price quote, or tax information for long-term-care insurance is available by contacting the APA Member Retirement Program by phone at (800) 262-9110 or by e-mail at [email protected]. Also, the Web site www.raymondjames.com/grande/ contains monthly financial newsletters and information on Raymond James Financial Services Inc. ▪

John and Traudy Grande are certified financial planners and owners and principals of Grande Financial Services Inc. and registered principals of Raymond James Financial Services Inc., member NASD/SIPC. They are administrators of APA’s Member Retirement Program.