Long Term Care Insurance Mississippi Tax Credit, Costs & Companies
Long Term Care Insurance in Mississippi
Planning ahead for future long term care needs is a key part of retirement planning. Many people have had first-hand experience with a loved one who needed long term care. These experiences underscore the reality of the financial and emotional stress when someone needs long term care.
Long term care insurance can protect your retirement assets. Plus it gives you the peace of mind, knowing you can cover the cost of long term care if you need it in the future. A long term care plan also protects your family from having to be caregivers. And it enables you to choose where you’ll receive any care needed in later years.
Who Needs Long Term Care Insurance
Someone turning age 65 today has about a 70 percent chance of needing some type of long term care during their lifetime. While one-third may never need long term care, 20 percent will need it for longer than 5 years. The average length of time people need long term care services is 3 years. 1
In Mississippi, the average cost for 3 years of long term care is $263,304 ($87,768 per year) at 2021 rates. That cost is projected to be $475,557 ($158,519 per year) in 2041. 2
And it’s not only seniors that need long term care. Over 35 percent of people currently receiving long term care services are between 18 and 64. 3
Does Medicare Cover Long Term Care?
Medicare is the federal health insurance program for people over 65 and for some younger people with disabilities. But Medicare does not pay for most long term care services. Specifically, Medicare does not pay for custodial care which makes up more than 90% of long term care.
An example of custodial care is when someone needs help with walking, bathing, eating, dressing and using the toilet. Custodial care is also what people need most when they have a physical impairment from a stroke. Or, due to cognitive impairment from dementia or Alzheimer’s disease. Don’t make the mistake of thinking Medicare covers long term care costs. It doesn’t.
When To Buy Long Term Care Insurance
Like most advisers, we recommend buying long term care insurance in your fifties or early sixties. The primary reasons for this recommendation are:
- The younger you are when you buy a policy, the lower the annual premiums.
- By the time you reach your mid sixties, you’re more likely to have a medical condition that makes you ineligible for a preferred-health discount, or makes it tough to get coverage at all.
- Even though you’ll pay premiums a longer period of time, you’ll typically pay less overall than someone buying at an older age.
So it almost never pays to wait. And, while you’re waiting, you’re uninsured. If an accident or illness happens causing you to need long-term care, you’ll have to pay out of pocket.
Long Term Care Insurance Options
There are two types of insurance in Mississippi that pay for long term care costs. And each type of policy has its specific advantages. One of our licensed professionals can provide more details to help you decide which is best for you.
Traditional Long Term Care Insurance
You pay an annual premium, and if you need long term care due to a cognitive or physical impairment, the policy pays for your care. Traditional LTC insurance policies make up about half of all long term care policies sold.
Hybrid Long Term Care Insurance
Hybrid long term care insurance is a popular alternative to traditional long term care insurance. These hybrid policies combine the benefits of life insurance, or an annuity, with long term care benefits. You can buy a hybrid long term care insurance policy by paying a one-time lump sum premium, or over a set period of time.
If long term care is never needed, the policy works much like a traditional life insurance policy. It would then pay a death benefit to your beneficiary when you die. And the death benefit is often similar to the amount paid for the policy. But if you need long-term care, the amount of money available can exceed the death benefit or long term care annuity value, often several times over, offering tremendous leverage of premium dollars.
Mississippi Long Term Care Costs
This Mississippi long term care cost data can help you decide how much insurance you need. And it compares nursing facility, assisted living and home care costs. Here is the 2021 cost of long term care in the State of Mississippi.2
Mississippi Long Term Care Costs – 2021 (annual)
|Region||Nursing Home (private room)||Nursing Home (semi-private room)||Assisted Living (private room)||Home Health Aide (44 hours/wk)|
|Mississippi State Median||$87,768||$85,410||$42,000||$45,760|
Mississippi Long Term Care Tax Credit
This law allows for taxpayers to get a tax credit of 25% of the premium or $500 of “the premium costs paid during the taxable year for a qualified long-term care insurance policy.” Note this is a State of Mississippi tax credit and not a federal tax credit.
The Mississippi Legislature initiated this tax policy in 2007 to encourage Mississippians to buy long term care insurance. This is a state income tax credit on long-term health insurance premiums. When this legislation became law, Gov. Barbour stated: Paying for long-term care for our loved ones can be an enormous financial burden on our families. This is one way we can help curb the costs of care, especially when the length of stay is unknown and options are limited.
According to information provided from the State Tax Commission, the credit cannot exceed a taxpayer’s tax liability and can’t be forwarded to the next year. The enactment of this legislation was under Senate Bill No 2237. 4
Mississippi Long Term Care Partnership Program
Currently, Mississippi does not have a Long Term Care Partnership Program. However, section 6021 of the 2005 Deficit Reduction Act does allow for Qualified State LTC Partnerships. This permits states with approved state plan amendments to exclude from estate recovery the amount of benefits paid under a qualified long term care insurance policy. Long Term Care Partnership Program policies are known as Partnership Policies.
Long Term Care Partnership Programs combine private long term care insurance with special access to Medicaid. The purpose of Long Term Care Partnership Programs it to help people prepare for the possibility of needing nursing home care, assisted living care or home care. Specifically, Long Term Care Partnership Program policies allow people to keep all, or part of their assets under their state’s Medicaid program, if their long term care needs last longer than the benefits of their Partnership policy.
Long Term Care Partnership Reciprocity
Currently, Mississippi does not have reciprocity with other states long term care Partnership programs. Reciprocity refers to someone who buys a Long Term Care Partnership Program policy where they reside and then later move to another state with a Partnership Program. This reciprocity means they will not lose the special asset protection when they move. Their new home state would also recognize accumulated asset protection for Medicaid qualification, if the person were already receiving long term care benefits from their Long Term Care Partnership policy before relocating.
How Much Does LTC Insurance Cost in Mississippi?
How much does long term care insurance cost in Mississippi? The answer: It depends on your age and health history at the time you buy the insurance. Generally speaking, the younger and healthier you are the lower the cost. Your long term care insurance premiums will also depend on the following benefits you select:
- Benefit Period
- Daily Benefit
- Elimination Period (a deductible in days)
- Inflation Protection (if chosen)
Long Term Care Insurance Companies in Mississippi
Mississippi long term care insurance is available from several well respected insurance companies. We compare these companies to find you the best protection at the lowest cost. Here’s a list of the best long term care insurance companies in Mississippi:
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Compare Mississippi’s Long Term Care Insurance Companies, Quotes and Policy Costs. We’ll help you compare the companies and plan options side by side. We also provide detailed comparisons to the AARP LTC insurance offering.
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1. 2022 U.S. Department of Health and Human Services (www.longtermcare.acl.gov), site accessed 05/08/2022
2. Cost of Care Survey 2021 (Genworth.com), site accessed 05/08/2022
3. Family Caregiver Alliance (www.caregiver.org), site accessed 05/08/2022
4. Please consult your tax adviser for more information as we do not provide tax or legal advice.