3 ways to help pay for your long-term care insurance
The cost of long-term care insurance is often one of the things that keep people from making this important investment. However, according to one financial expert, there are some tax-friendly ways that can help you save money for long-term insurance.
— Deduct the premiums for long-term care insurance as a medical expense. Part of the premiums can be deducted if they exceed 7.5 percent of your adjusted gross income if you are 65 years old or older or 10 percent of your AGI if you are younger than 65. Most of the long-term care policies bought in the last several years are considered eligible for this tax deduction.
— Use your permanent life insurance to pay for your long-term care. You can transfer money from a cash-value life insurance policy to pay for a policy that combines both long-term care benefits and life insurance or for a traditional care policy.
— Transfer money from an annuity. You can transfer money without having to pay taxes from an annuity to pay for a regular long-term care policy or to pay for an annuity that provides benefits for your long-term care. If you take the money from an annuity rather than making a tax-free transfer, you will owe income taxes on part of it. Your long-term care provider can help you make this transfer, which is known as a 1035 exchange.
Paying for long-term care insurance can be difficult sometimes, but when you make a claim for benefits and it is denied, that can be devastating. If this should happen, an experienced lawyer can help you pursue the benefits to which you are entitled.
Source: Kiplinger, “4 Tax-Friendly Ways to Pay for Long-Term-Care Insurance,” Kimberly Lankford, Aug. 16, 2016