From Kiplinger · · 1m 20s
Self-Funding Long-Term Care Could Cost More Than You Think
Self-funding long-term care may lead to higher costs and family strain than expected.
In brief
Self-funding long-term care may lead to higher costs and family strain than expected. Self-funding long-term care risks higher taxes, family stress, and financial strain compared to insurance solutions. Originally reported by Kiplinger.
Self-Funding Long-Term Care
Self-funding long-term care costs more than expected due to taxes and family strain.
Real Cost of Self-Funding
To cover $10,000 monthly care costs, self-funding requires $16,000 to $18,000 after taxes.
Tax and Medicare Impact
Self-funding increases tax bracket, Medicare premiums, and IRMAA surcharges.
Timing and Family Stress
Health events during market downturns force poor investment decisions and family conflict.
Richard and Diane's Story
Diane saw her father's care costs and refused to put children through financial strain.
Medicare Coverage Limits
Medicare covers skilled nursing only for up to 21 days before care becomes custodial.
Long-Term Care Insurance Solution
A $280,000 IRA transfer funds a policy with $6,000 monthly tax-free care benefits.
Benefits of Insurance
Policy benefits increase 3% annually for 20 years, with unlimited duration and tax-free payments.
Why Self-Funding Fails
Self-funding cannot provide unlimited tax-free care benefits without family strain.
Three Steps to Take
Run real numbers, get insurance quotes, and discuss care responsibilities with family.
The short version
Self-funding long-term care risks higher taxes, family stress, and financial strain compared to insurance solutions.
