Let the government (CMS) help pay your LTCi costs?
As expensive as Long Term Care insurance can be for many of us, one should always look for creative ways to help pay for it….as it can be critical to have. The IRS gives you potential tax breaks for having LTCi. You can use HSA funds to pay for LTC premiums up to the age of 65, but then what? Wouldn’t it be nice if someone just gave you a handout for this?
Well……there is another option that lets the government (Medicare) actually put money in your pocket to help you directly pay some or all of your LTC premiums if you choose. It is called a Medicare Advantage Plan – Medical Savings Account. Like a HSA, a MSA allows you to have control over your health care spending. Unlike a HSA, where you put your money in the account, if you elect to get a Medicare Advantage (MA) plan with MSA savings options, Medicare will immediately deposit as much as $1300 per person into a MSA account in your name. This money is deposited every year (subject to change of course) and that money is to be used for medical expenses as needed. Then when the $1300 is spent, the Medicare beneficiary spends his/her own money up to a max out of pocket (typically another $1700) before medicare pays 100% of all Medicare eligible costs. It turns out that LTCi premiums is a valid IRS medical expense, so you could take that $1300 every year and pay LTC premiums with it.
Now keep in mind that the $1300 is supposed to be used to pay for doctor visits, annual checkups, Rx drugs, hospital stays, etc. But…… what if you are lucky enough to be one of the healthier baby boomers hitting 65…have had HSA plans all your life….don’t mind having a deductible for health care costs….and know that the Medicare rates for medical services tends to be fairly cheap? So maybe at the end of the year, you still have $800 left in the account…..you can spend it on LTC if you choose. I think the healthier individuals may like the idea.
I am not advocating that you sacrifice your health checkups just so you can pull out the $1300 for LTC premiums, but if you stay healthy for several years, you could build up a little MSA nest egg. You could of course get your teeth fixed, new glasses, and other medical services too and use the $1300 they handed you. Oh, and did I tell you that the monthly premium for these MSA plans tends to be $0….as opposed to maybe $150/month for a good Med Sup Plan F? Now you just saved $1800/year in premium per person, Medicare put $1300 per person into your MSA account and handed you a debit card and said “have fun”. With the savings over the traditional Med Sup and the $1300 cash, you may now have enough for a fully paid LTC plan…and then you can pay minimal medical fees as you go, with typically no more than about $3000 out of pocket in the event of a tragedy. Can you spell “no brainer”?
Interesting concept.
