Long-Term Care Insurance from an Estate Planning Attorney's Perspective
Long-Term Care Insurance is insurance that pays for nursing-home and/or home-health care for individuals over 65 years old.
As an estate planning attorney, many of my clients ask me if they need Long-Term Care Insurance as part of their estate plan. I am not a financial planner and I don’t sell insurance, so I can only speak to Long-Term Care Insurance based upon my conversations with Senior Living Professionals and Financial Planners that I work with along with the experiences that my clients have had when needing Long-Term Care.
Back in June, 2017 I organized the McLean County Senior Living Seminar and presented on Senior Living Options in McLean County. Financial Planner, Krista McBeath, also presented a seminar on Long-Term Care Insurance and we had a panel of six Senior Living Care Professionals discuss current issues about Senior Living Options in McLean County, Illinois. Over 130 people registered and attended this event.
I created a McLean County Senior Living Guide 2017 for that event. This guide explains the different levels of care that Senior Living Facilities provide and the cost ranges for over 20 facilities in McLean County in 2017. Although the information in that guide is out of date at this point – you can view and download a copy of this guide by Clicking Here.
Here are my main points about Long-Term Care Insurance:
1. Private Pay: The general rule is that if you need Long-Term Care you are going to have to pay for it with your own assets. Medicare pays for short term duration stays in a nursing home for rehabilitation purposes – but not for Long-Term Care.
2. Medicaid Planning: If you don’t have money to pay for Long-Term Care – then you have to apply for Medicaid (not Medicare) – which means in general – you can’t own more than $2,000 of assets (along with some excluded assets). If you have more assets then what is allowed – Medicaid will make you pay that money towards Long Term Care costs until you qualify for Medicaid. See my three part series on Medicaid Planning for more details on basic information about Medicaid Planning - Part 1; Part 2; Part 3. Please Note: Medicaid Planning is a very specialized area of the law. If someone comes to me for general estate planning advice, but their main objective is to plan for Medicaid – I refer them to other attorneys that specialize in Medicaid Planning.
3. Long-Term Care Insurance Example: Usually Long-Term Care Insurance does not cover the entire cost of Long-Term Care. Let’s assume someone is in a skilled nursing facility – the most expensive tier of Long-Term Care options – and is paying $10,000 a month for that care. If they have a Long-Term Care Insurance policy – that policy might pay $5,000 a month. The individual would still need to cover the remaining $5,000 amount every month for their care through their monthly income sources of social security, pensions, and investment income. If their monthly income does not cover their remaining $5,000 amount – then they would need to dip into assets to cover the difference. I have seen Long-Term Care Insurance make a big difference on whether clients could cover Long-Term Care costs without having to dip into their savings. An advisor experienced in Long-Term Care Insurance can give you different options on what type of Long-Term Care Insurance could benefit you the most.
Below is Krista McBeath presenting at the McLean County Senior Living Seminar on Long-Term Care Insurance. Can you guess what the probability is that someone will be put at financial risk because of Long-Term Care – see the video below for the answer.
Krista McBeath has written an article that gives more detailed information about Long-Term Care Insurance. You can read that article by Clicking Here. If you are thinking about Long-Term Care Insurance, this article would be a good place to start.
Bottom Line: If you are over 45 and thinking about your retirement, estate planning and ways of preserving your assets, Long-Term Care Insurance is also something to consider. You should seek an insurance professional or financial adviser that you trust that is experienced in Long-Term Care Insurance policies that can advise you on your options.
This article is a service of Attorney Chad A. Ritchie and the Ritchie Law Office, Ltd.
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