Lower the Cost of Long-Term Care Insurance with these Tax-Efficient Tips

A couple of years ago, a friend asked me if I had long-term care insurance (LTCi). Since both of us are self-employed and closer to 60 than 50, it wasn’t just idle curiosity on his part.

Neither of us has employer-sponsored coverage to support our family if we lose our ability to give or to cover the excessive expense of care if we can't take care of ourselves.

Bradley Hilton, founder of Sonas Financial Planning, adds, "LTCi kicks in if you can't do at least two of the six ADLs: bathing, dressing, eating, toileting, getting in and out of bed and chairs, and managing incontinence, or become cognitively impaired."

My insurance agent recommended a specific LTCi coverage years ago, I informed my friend. He said this policy's price will double soon. I decided to follow his advice.

As projected, premiums quadrupled a month later. Many policy provisions became unobtainable over time. If you qualify, the policy pays out for life. LTCi is pricey and less generous nowadays. I asked financial gurus for tax-efficient methods to save on LTCi if you need it now.

The Most Tax-Efficient Ways of Saving Money on LTCi

– “Use tax-free money from your Health Savings Account (HSA) to cover LTCi premiums – “Do a so-called ‘1035 Exchange’ of a cash value life or annuity" – “If you have no heirs and/or they don’t need your bequest, you can self-insure using tax-free withdrawals"

If LTCi is right for you, there are still tax-efficient ways to buy affordable coverage.