Many people
assume they cannot afford long-term care insurance to protect themselves and
their families from the financial, emotional and physical sacrifices needed to
provide long-term care for a loved one. Yet, 46 percent of older adults could
not estimate the potential monthly cost of a long-term care policy, according
to a consumer survey.
In reality,
long-term care premiums are a reasonably small expense when compared to paying
for care out of pocket, as these costs can run as high as $100,000 a year.
Despite these facts, finding ways to pay for premiums can often be a genuine
challenge for many families seeking coverage. Fortunately, there are several
funding options available to help people on tight budgets pay for long-term
care insurance, including Health Savings Accounts (HSA).
An HSA is a
tax-advantaged medical savings account accessible to taxpayers in the U.S. who
are enrolled in a high-deductible health plan. A high-deductible health plan
has a yearly deductible of at least $1,200 for individuals and $2,400 for
families.
Using an HSA to
pay for insurance can be a smart alternative for people who can’t deduct their
premiums as a self-employed person or as reimbursed medical expenses on a federal
tax return. Qualified long-term care insurance premiums are considered a
medical expense, meaning people can take money from their HSA to cover these
costs.
There are
numerous tax advantages associated with HSAs such as tax-free benefits on
interest and other earnings on account assets. Contributions made by an account
holder’s employer may be excluded from their gross income in addition to
numerous other attractive tax incentives.
Although HSAs can
be a practical way to pay for long-term care insurance, not everyone qualifies
and even those who do can’t always use the account to pay for premiums.
Consumers should speak to their financial advisors about whether or not an HSA
is an option for them.
As families
across the nation begin to organize their households for fall, it’s important
for everyone to have a retirement plan in place that secures their financial
future. A long-term care policy can help and with HSAs, even consumers on tight
budgets do not have to be without protection.
Contact Lucy Grosz, CLTC today at 614-889-0934 or lucy@altavistaben.com to learn more.
