According to a new survey by Genworth Financial, the national
average annual cost of a private room in a nursing home is $76,460:
over $200 per day. In some areas, the average cost is over $100,000
a year.
You can reduce your exposure by buying long-term care (LTC) insurance,
but LTC insurance can be very expensive. For a 55-year-old female
who wants a policy with a $200 daily benefit, the cost might range
from $2,000 to $7,000 per year, depending on specific features she
chooses.
Fortunately, most LTC insurance policies now are "tax-qualified,"
as defined by federal law. With a tax-qualified policy, some of the
premiums you pay may be deducted on your income tax return. For
someone in their 50s, the maximum deduction is $1,150 this year.
That scales up to $3,850, for people over age 70.
To get the deduction, total medical expenses must exceed 7.5 percent
of adjusted gross income (AGI). That is, someone in his or her 50s
can include up to $1,150 in LTC insurance premiums this year, as a
medical expense. If your total medical expenses this year are over
7.5 percent of your AGI, you can deduct the excess amount.
