By Brian M. Johnson, MBA, CLTC
When a family is faced with a long-term care
event, the education on care giving usually
begins. It’s often a time of high emotions – a
crisis if you will.
Anyone that has had a parent, in-law, spouse
or other family member require care at home
or in a facility can certainly relate. It’s an
experience like this that makes people begin
thinking about themselves and their children.
We never want to be a burden to those we love
and want to ensure that we have options for
our health care.
The brutal reality is that there are very few funding mechanisms in place to finance the high cost of care at home or in a facility like assisted living or nursing homes.
Medicaid is a welfare program that is designed to pay for health care and long-term care for those at the poverty line. In the past, it was common practice to try and transfer assets in order to qualify for Medicaid benefits.
This strategy is still valid, however it’s becoming increasingly difficult to accomplish due to drastic cuts in the Medicaid system. In addition, Medicaid leaves people with little options. Medicaid will pay for minimal home care and zero assisted living. It’s primarily a funding source for nursing homes. Be sure to consult with your elder law or estate planning attorney.
Many assets, such as retirement plans, may be exempt from Medicaid spend down rules. Our default plan for long-term care is paying out of pocket from our income and assets. If one should require care at home or in a facility, Medicare, may cover part of the cost for the fi rst 100 days. However, at day 101, we must begin paying out of pocket, as such care is no longer deemed rehabilitative in nature.
Insuring the risk is our third strategy for planning for long-term care. While this insurance is perceived as expensive, it doesn’t have to be. For instance, a 65-year-old person in relatively good health can enroll in a basic long-term care plan that would pay $3,000 month to use however they see fi t for $61 per month. While $3,000 a month will not cover a nursing home, it will provide the family with an additional $3,000 each month to help provide a better level of care. As you explore some options for insuring the risk, keep the following points in mind:
â€¢ Consider a New York state Partnership plan for total asset protection. All state residents are eligible. It’s a private long-term care insurance policy that combines with Medicaid extended coverage. If the insured person exhausts the benefits of their policy, they can then qualify for Medicaid extended coverage, while protection state tax credit for long-term care insurance premiums. If you live outside the state, you may have a state tax credit or deduction as well.
â€¢ Consider a base long-term care plan with a reduced benefit amount, more conducive to the cost of home care for a reduced premium.
â€¢ Late in 2013, long-term care insurance companies are going to gender-based pricing, meaning women will be paying between 40-60 percent more than men. If you’ve been considering long-term care insurance, and you’re woman, now is the time to inquire.
â€¢ New on the market are linked benefit policies, which are life insurance policies with a long-term care or chronic illness rider. If one requires long-term care, they can access the death benefit while alive to pay for such services. If they never require care, the named beneficiary receives the tax-free death benefit.
â€¢ If you’ve been declined for a long-term care insurance policy before, you may still qualify for a linked benefit policy. Contact your long-term care specialist for details.
There are many options for insuring the long-term care risk, which will hopefully fit into any strategy, belief or budget. It’s important that you deal with an insurance or financial professional well versed in the myriad of options. Waiting until there is a need for care is not the right time to start researching.
As John F. Kennedy said, “The time fix a leaky roof is when the sun is shining.” With insurance companies going to gender-based pricing sometime this year, now is the time to do your homework.
Brian M. Johnson, MBA, CLTC is director of business development at New York Long-Term Care Brokers, Ltd. in Clifton Park. He can be reached at 371-5522 ext. 154.
Photo Courtesy of New york Long-Term Care Brokers Ltd.