Magazine article USA TODAY

Making Long-Term Care More Affordable

Magazine article USA TODAY

Making Long-Term Care More Affordable

Article excerpt

Congress passed the Health Insurance Portability and Accountability Act to make it easier for workers to change jobs and not lose their health insurance. The act also made significant changes in the tax treatment of long-term care insurance that should make its purchase more affordable, a major factor as the baby boom generation heads toward retirement, according to the Institute of Certified Financial Planners. Denver. Colo.

Nursing home care averages $40,000 a year, and a study by the American Health Care Association found that a year of such care can run three times the average senior's annual income. Destitute Americans may quality for Medicaid to pay the bill, but the majority of people must do so out of personal income and assets or with long-term care insurance.

Effective with new policies issued after Dec. 31, 1996, the law will help defray some of the expense of long-term care insurance by allowing taxpayers to deduct the cost of premiums much like they can deduct their out-of-pocket health insurance premiums. To take a deduction, they must itemize total medical expenses -- health insurance and long-term care premiums, co-pays, prescriptions, etc. They then can deduct those expenses that exceed 7.5% of adjusted gross income (AGI). If the AGI is $40,000, for instance, the amount of expenses, including long-term care premiums, that exceeds the $3,000 threshold can be deducted.

Assume one exceeds that threshold by $1,000. …

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