Welcome to the latest edition of our monthly newsletter at Vick Law, P.C. This month, we want to emphasize the importance of long-term care planning and how it can significantly impact your future and the well-being of your loved ones. As we navigate the complexities of life, it's essential to have a proactive approach to address potential long-term care needs and ensure financial security and peace of mind. In this newsletter, we will explore the benefits of long-term care planning, discuss key considerations, and provide valuable insights to help you make informed decisions. Let's delve into the world of long-term care planning and discover the steps you can take to protect yourself and your family's future.
Paying for long-term healthcare can be overwhelming if advance planning has not been done. Most people end up relying on some combination of personal savings, long-term care insurance, government benefits and private financing. Government benefits may be available from state and federal programs. However, these are often means-tested. Think Medicaid. Many Americans who own their own homes and have retirement savings may not qualify, unless they have done Medicaid planning.
When Should You Begin Planning for Long Term Care?
The time to plan for long-term care costs is before a health crisis. Start with an assessment of resources. Do you own a long-term care (LTC) insurance policy? If no, purchase one as soon as possible. The longer you wait, the older you will be. That means higher premiums and the risk that you will develop a disqualifying health condition. The cost of a policy will be far less than the cost of care in a skilled nursing facility.
Some insurance companies now sell “hybrid” life insurance policies, where the main component is a life insurance policy with a rider provision for LTC costs. Another option is to see if your life insurance company will add a LTC rider to an existing life insurance policy. This “hybrid” form of protection is popular because the policy still pays a life insurance death benefit if the long-term care feature is not triggered.
Estate Planning Incorporates Long-Term Care
Preparing for long-term care should be addressed when creating (or updating) your estate plan. In some states, trusts may be used to remove assets from countable assets and in some cases, putting a primary residence into a trust makes sense for the family. While the primary home is an exempt asset to determine eligibility, Medicaid will otherwise make a claim on the equity of the house once you are no longer living in the house or make a claim against the estate after you have passed.
How Much Does Long Term Care Cost?
The cost of long-term care depends on the location where care is sought, type of medical care required and how long care is needed. Nursing home costs range from approximately $6,000 monthly for a semi-private to $12,000 monthly for a private room. The challenge of nursing home care is not just the cost, but availability. If you are solely dependent upon Medicaid, there is no guarantee of a bed being available at a nearby nursing home or at a facility you deem to be acceptable.
Using Health Saving Accounts (HSA) for Long Term Care
If you have a qualified high-deductible health insurance plan, you may be able to open an HSA to help pay for future long-term care expenses. Money in most HSAs rolls over from year to year. If withdrawals are used for qualified health care expenses, they may be tax free. Check with your benefits administrator. However, given the high cost of long-term care, do not rely on funds in an HSA to cover more than the “waiting period” for your long-term care policy to begin paying for your care.
Bottom Line for Medicaid
To qualify for Medicaid, almost all resources must be depleted. While state Medicaid programs provide some spousal protection laws, spousal assets and income will be limited. Some states are extremely aggressive about “recovering” assets after a Medicaid patient dies to reimburse costs, with a few states even pursuing descendants to recover costs. The likelihood of needing long term care for anyone 65 and over is high, so it is important to have a strategy now to pay for your potential care later.
By taking proactive steps now, you can have peace of mind knowing that you have a plan in place for any potential long-term care needs that may arise. At Vick Law, P.C., we are here to provide expert guidance and support in navigating the complexities of long-term care planning. Contact us today to schedule a consultation and let us help you create a comprehensive plan that ensures your well-being and financial stability.
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