Accountants Should Help Clients Financial Impact of Long-Term Care

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.