Long term care insurance can protect personal assets and inheritance for the family, provide greater choice in the selection of long term care settings (nursing and assisted living facilities) and generally provide for financial security. Recently, enhanced federal health insurance legislation has helped make private long term care insurance a more viable option for paying for long term care costs while preserving personal savings, choice and dignity.

The recently enacted Health Insurance Reform Act includes consumer protections for purchasers of long term care insurance as well as clarifications that make treatment of private long term care insurance identical to that of health insurance coverage. Starting January 1, 1997, individuals are able to include out-of-pocket expenses for long term care and long term care insurance premiums with their other itemized medical expenses on their annual tax returns. Long term care and other medical expenses are deductible, to the extent that they exceed the federal government’s 7.5 percent threshold of adjusted gross income. Also, the insurance benefits consumers receive, for the most part, will not be taxable as income.

Long term care insurance policy premiums are set based on several factors: age, health, length of deductible period, amount paid and duration of benefits. Higher daily benefits and optional features, such as inflation protection and nonforfeiture benefits, increase the premium. According to the Health Insurance Association of America, the annual premium for a low-option policy for a person at age 50 is about $850; at 65, that same policy costs about $1,800; and at 79, about $5,500. (You should consult with your insurance or financial advisor on current costs.)

Contact your state insurance commissioner’s office for a list of companies authorized to sell long term care insurance in your state. For more information on long term care insurance, see the American Health Care Association’s and the National Center for Assisted Living’s brochure “Understanding Long Term Care Insurance.”