**Interview with Financial Expert Huang Xiaodong**
As we sit down with financial expert Huang Xiaodong, he highlights a pressing concern for many Americans: the anticipated need for long-term care. According to official statistics, a staggering 70% of individuals aged 65 and older will require long-term care before they pass away, typically for a duration spanning 5 to 8 years due to conditions such as strokes, cancer, or Alzheimer’s disease. Huang points out that the average monthly cost for such care ranges from $6,000 to $8,000, leading to a potential total expense of between $500,000 and $1.2 million over the years.
A concerning trend emerges—90% of Americans currently lack long-term care insurance. Many find themselves dependent on government assistance programs like Medicaid, which has placed an immense financial burden on the government. Huang notes, “Officials are looking at options like raising payroll taxes to fund these programs. However, this only partially addresses the issue; government plans usually cover only six months of care, which is frequently inadequate.”
Huang recommends that individuals consider purchasing private long-term care insurance that aligns with their specific needs. He emphasizes that this choice not only helps avoid mandatory participation in government-funded programs and payroll taxes but can also result in tax savings. He shares four strategies for reducing taxes through long-term care insurance:
1. **Tax Deductions**: Depending on one’s age, individuals can claim tax deductions on long-term care insurance premiums:
– Ages 41-50: $850
– Ages 51-60: $1,790
– Ages 61-70: $4,770
– Age 70 and over: $5,960
For example, a couple aged 65 purchasing a plan with monthly benefits of $6,000 would pay an annual premium of $11,411, with $5,747 being tax-deductible.
2. **Health Savings Account (HSA)**: “If you have an HSA, you can use those funds to pay for about half of your premium, based on tax-free limits,” Huang explains. This allows for pre-tax purchases of long-term care insurance, with future payouts remaining tax-exempt.
3. **Business Ownership**: For business owners, it’s possible to purchase long-term care insurance for themselves and employees, with premium costs potentially being fully or partially tax-deductible, depending on the structure of the company.
4. **Exchanging Annuities or Life Insurance**: If individuals have an annuity or a life insurance policy that no longer serves their needs, they can exchange its cash value for long-term care insurance. Huang states, “This can help avoid capital gains taxes while still providing long-term care benefits, all tax-exempt.” For instance, a 60-year-old man might exchange a $95,000 life insurance policy for long-term care insurance that offers $6,000 a month with lifetime coverage limits, potentially yielding $150,000 in life insurance benefits.
He also notes that this type of insurance can cover home care or nursing home expenses, with all monthly benefit payouts being tax-free. “Moreover,” Huang adds, “if benefits aren’t fully utilized or only partially used before passing away, beneficiaries will still receive life insurance payouts, which are also tax-exempt.”
Huang addresses a common concern: securing insurance. “Many individuals experience challenges due to rejections from providers,” he says, but adds, “We work with several financially stable A-rated insurance companies, enabling us to find coverage even for those with pre-existing conditions like high blood pressure or diabetes. I encourage anyone who has been denied coverage to reach out.”
For those interested in delving deeper into long-term care insurance and annuities, Huang is hosting a free educational seminar on September 21.
– **Date and Time**: Saturday, September 21, from 2 PM to 3 PM
– **Location**: 3100 Mowry Ave, CA, 94538
An online seminar option is also available. To register, interested individuals should call 408-466-0233 and ask for Ms. Liang, or email [email protected] for an online participation link.
