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Summary: LTCi in 2025 — What’s New with Long-Term Care Insurance

(Financial Experts Network webinar with Richard Rusoff, The Krause Agency, hosted by Tom Dickson)

1. Market Outlook: LTC Industry Evolution

• The LTC insurance market is rebounding with new products, simplified underwriting, and caregiver-focused support tools.
• Insurers are prioritizing caregiver support programs to reduce burnout and improve care coordination.
• Industry shift: LTC planning is now framed as asset and income protection, not merely health coverage.

📖 Reference: U.S. Department of Health and Human Services – “Long-Term Care Services and Supports”
https://aspe.hhs.gov/reports/understanding-long-term-services-supports

2. New and Emerging Product Trends

Chronic Illness Riders vs. LTC Riders

• Chronic Illness Riders (IRC §101g): Triggered when a condition is deemed non-recoverable; limited flexibility.
• LTC Riders (IRC §7702B): Broader coverage, tax-qualified, available even if recovery is possible.
• UL, IUL, and VUL products increasingly include both options.
• John Hancock’s Life Care IUL now offers dual growth—both the LTC benefit and death benefit increase over time.

📖 Reference: IRS – §7702B Tax-Qualified LTC Contracts
https://www.irs.gov/pub/irs-drop/n-97-31.pdf

Guaranteed Issue and Simplified Underwriting Options

• Guaranteed Issue Plans for individuals previously declined for LTCI:
  • Example: CHUBB Group Plan — no underwriting if employed 30+ hours/week.
  • EquiTrust Annuity LTC — indexed annuity that provides ~1.5–3x premium in LTC benefits with minimal health screening via Zoom mobility/cognition check.
• Short-Term Care (STC) plans (1-year facility + 1-year home care) filling the gap for clients with long elimination periods or limited insurability.

📖 Reference: American Association for Long-Term Care Insurance (AALTCI) – “Short-Term Care Insurance Overview”
https://www.aaltci.org/stc/

Carrier Comeback: Genworth

• Genworth’s “CareScout” plan re-enters the market (ages 40–65) after a decade-long hiatus.
• Focuses heavily on caregiver networks and real-time support.
• Advisors should note lingering skepticism due to past premium increases and rating downgrades.
• Emphasis: Use hybrid products for guaranteed premiums when clients express concerns about traditional LTCI volatility.

📖 Reference: NAIC – Genworth Financial Profile
https://content.naic.org/cis_consumer_information.htm

3. Tax Advantages and Deductibility Rules

Individual Deductions

• LTCI premiums for tax-qualified plans (IRC §7702B) count as medical expenses under IRS Publication 502.
• Deductible amounts are age-based and subject to the 7.5% AGI threshold.

• LTC benefits are tax-free, unless per diem payouts exceed $420/day (2025 limit) or actual qualified expenses.

📖 Reference: IRS – Publication 502, “Medical and Dental Expenses”
https://www.irs.gov/publications/p502

📖 Reference: IRS – LTC Premium Limits (2025 Update)
https://www.irs.gov/newsroom/tax-deductions-for-long-term-care-insurance

Employer and Business Deductions

• C-Corporations: 100% deductible for employer-paid LTCI premiums for employees, spouses, and dependents.
• S-Corps, LLCs, Partnerships:
  • Premiums added to owner’s income (K-1),
  • Deductible up to eligible age-based limits (same table above),
  • Not subject to 7.5% AGI rule.
• Sole Proprietors: Above-the-line deduction up to eligible limit.
• Employer-paid LTCI not taxable to non-owner employees.

📖 Reference: IRS – “Tax Benefits of Long-Term Care Insurance”
https://www.irs.gov/retirement-plans/long-term-care-insurance-contracts

4. Partnership Plans and Medicaid Asset Protection

• LTC Partnership Programs (authorized under the Deficit Reduction Act of 2005):
  • Coordination between private insurers and state Medicaid programs.
  • Provide dollar-for-dollar asset protection for policyholders who later need Medicaid.
• Requirements:
  • Must be a traditional (not hybrid) tax-qualified LTC policy.
  • Must include compound inflation protection (up to age 75).
  • Agent must complete 8-hour initial CE + 4-hour biannual refreshers.
• Example: A client with $500,000 in LTC benefits paid by the insurer can protect $500,000 of personal assets from Medicaid recovery.

📖 Reference: Medicaid.gov – “Long-Term Care Partnership Program”
https://www.medicaid.gov/medicaid/long-term-services-supports/ltss-partnership-program/index.html

📖 Reference: Deficit Reduction Act of 2005 Summary
https://www.congress.gov/bill/109th-congress/senate-bill/1932

5. Hybrid LTC Solutions: Growing Popularity

• Hybrid Life + LTC or Annuity + LTC products now dominate sales.
• Advantages:
  • Guaranteed premiums and benefits.
  • Return-of-premium or death benefit if LTC not used.
  • No rate increase risk (unlike traditional LTCI).
• Limitations:
  • Higher upfront cost.
  • May underperform traditional policies on pure LTC leverage.

📖 Reference: LIMRA – “Individual LTC and Combination Product Trends Report”
https://www.limra.com/en/research/research-abstracts/2024/long-term-care-combo-insurance-sales/

6. Key Advisor Takeaways

• Always initiate the LTC conversation: Long-term care expenses (avg. $80,000–$120,000/year) can devastate client retirement plans.
• Use HSA funds for tax-qualified LTC premiums (up to annual age limit).
• Favor hybrids or indexed ULs for clients concerned about future rate hikes.
• Reassess existing policies: Consider reducing benefits instead of lapsing coverage.
• Short-term and guaranteed-issue plans provide entry-level protection for clients otherwise uninsurable.
• Caregiver support resources can be a differentiator for advisors discussing LTC planning holistically.

📖 Reference: Genworth Cost of Care Survey (2024)
https://www.genworth.com/aging-and-you/finances/cost-of-care.html

✅ Bottom Line for Financial Advisors:
The LTC landscape in 2025 offers more options than ever—ranging from simplified short-term policies to flexible hybrid solutions and tax-advantaged employer strategies. Advisors should frame LTC planning as risk management and income preservation, using both insurance design and tax deductibility to meet client goals.