| “The Government will take care of me” |
Don’t count on it.
Insurance plans like Medicare, Medicare Supplements and major medical health policies specifically exclude custodial care and are designed to pay for skilled services. Long term care services cover chronic health conditions where there are generally very limited skilled services being rendered since there is no expectation of recovery.
After at least a three day hospital stay, if continuous skilled care is required in a skilled nursing facility, then Medicare may pay in full for up to 20 days. For days 21-100, Medicare Supplement plans may cover the $137.00 co-pay per day (2010 figure). In certain situations, if intermittent skilled care is required at home, Medicare may pay.
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Medicaid is a safety net for those who have very limited assets. The Deficit Reduction Act of 2005 has changed the rules regarding gifting to qualify for Medicaid sooner. The look-back period is now 5 years and the penalty period starts on the date you apply for Medicaid.
The applicant is required to disclose and produce any ownership in annuities, all transfers within the past 5 years, and the state must be designated as the remainder beneficiary.
The new law mandates that Medicaid deny benefits for applicants with homes that have greater than $500,000 in equity. The measure was aimed at individuals that sought Medicaid benefits by sheltering assets in expensive homes.
If you believe you might qualify for Medicaid, consult an elder law attorney. |
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| “My family will take care of me” |
| For some families, it’s not by choice. Extended caregiving for family members by family members contributes to a significant decline in both physical and emotional health. Realistic questions to ask are: |
| Do your children want to take care of you and is it practical? |
| Do you want them to care for you? |
| Do your children live nearby? |
| How about 20 years from now? |
| Are both spouses working? |
| Can one stop working to care for you? |
| Are you prepared to make-up the compensation and benefits to the family member who will be caring for you? |
| Do you want your family members to spend quality time with you or perform custodial care functions (bathing, toileting, and dressing)? |
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| “I can pay for care myself” |
Some people can pay for their own care….but why would they? Writing checks from your own portfolio may not be the most prudent financial or estate planning strategy.
Most successful people manage risk by using insurance for their health care costs, home, car, income and life. If highly appreciated assets such as stocks, real estate investments, and business equity have to be sold to pay for the escalating care costs, the owners pay taxes on the gains and lose the continued appreciation. Upon death, the heirs lose their “step up in basis” that would have eliminated capital gains taxes on such appreciation. Creating financial certainty and minimizing risk is a sound economic approach. |
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| “I may never use it so I don’t want to waste my money.” |
It typically takes anywhere from 3 - 7 months of claim usage to recoup your premiums.
You could purchase a return of premium rider or find out more about a combined life and long term care insurance policy that could provide a benefit whether you used it or not. |
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| “I am going into a Continuing Care Retirement Community” |
Health changes may limit your ability to enter a community. Long term care insurance keeps those options open.
Some communities permit you to use home health care aides paid by your insurance so that you can remain in Assisted Living longer.
There are different kinds of contracts with retirement communities. For those communities that charge more fees as the need for care increases, long term care insurance could be a financial resource to prevent someone from spending down a lifetime of savings. |
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| “I’ll think about it later, I’m paying for college.” |
The risk of postponing coverage now is you may not be insurable in the future. Premiums are much less expensive at younger ages. By purchasing the coverage while in good health, you get the lowest price. The percentage of people accepted when applying for long term care insurance is higher at younger ages than older ages. Looking into a plan today that can meet your budget is economically advantageous rather than postponing.
There are some policies that enable you to add additional benefits to your policy based upon health at original issued date. For more information contact Group LTC Services at 800-345-2910 or email us at info@groupltcservices.com. |
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