Academic journal article Journal of Accountancy

From the Tax Adviser: Buying Long-Term-Care Insurance: A Security Blanket for Old Age

Academic journal article Journal of Accountancy

From the Tax Adviser: Buying Long-Term-Care Insurance: A Security Blanket for Old Age

Article excerpt

Long-term-care (LTC) planning focuses on meeting the financial, medical, housing and personal needs of individuals who can no longer function independently. Planning must address the level of care needed, where it best can be provided and how it will be financed. CPAs can assist clients in making decisions about purchasing LTC insurance to meet the costs.

TYPES OF CARE

Individuals unable to function independently may receive the following care:

* Acute care. The person's medical needs warrant hospital admission.

* Intermediate and skilled care (generally, nursing home care). If the patient will pay privately, the doctor and family determine whether the facility is appropriate. For Medicaid to pay, the individual must meet the state program's "medically necessary" criterion.

* Residential care or assisted living. Generally, persons who require such care do not meet the criteria for a nursing facility's skilled or intermediate care. These facilities cost less than nursing homes. Some states provide payment assistance.

* Home care. This is generally limited to those who can operate with some degree of independence and have a family support system that allows them to remain at home; the costs of such care can be offset by payment assistance from Medicare or Medicaid.

PAYING LTC COSTS

LTC costs are paid privately; by Medicaid, Medicare or Medigap; or by LTC insurance. Some limited services initially may be covered by Medicare or the Veterans' Administration, but these are not long-term funding sources.

* Private pay. Currently, nursing homes charge approximately $3,000 to $6,000 per month. …

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