Should I Have Long-Term Care Insurance?

As elder law attorneys, we help clients that are concerned about legal and financial matters that are relevant to senior citizens. Without question, the most pressing situation is the matter of long-term care and the costs that go along with it.

We are going to look at the pros and cons of long-term care insurance here, but before we get to that point, we will share some necessary background information.

Don’t Be Overconfident

A lot of people do not give long-term care a second thought because they assume they will always be able to handle their own activities of daily living. This is understandable in a way, because it’s hard to wrap your head around something that you have never experienced.

At the same time, there are probably things that you go through right now that you could have never dreamed of 20 years ago.

The statistics paint a stark picture when it comes to aging and long-term care. Seven out of every 10 seniors will need some form of living assistance, and more than one third of elders will reside in nursing homes.

These stats are coming from LongTermCare.gov, which is a website that is maintained by the U.S. Department of Health and Human Services.

You may think that your ace in the hole is Medicare eligibility. In fact, this program does not pay for the custodial care that nursing homes provide, and it doesn’t pay for in-home care.

Simply put, you are taking a gamble if you keep your head stuck in the sand, and the odds are against you.

Nursing Home Costs

If you have to pay for a stay in a nursing home out-of-pocket, you may experience a bit of sticker shock. You can expect to pay about $100,000 for a year in a nursing home in Charlotte, and the figure is $80,000 in the Ashland, Kentucky area.

Overall, the average length of stay is one year, but 21 percent of people that receive care need it for between two and five years, and 13 percent require care for over five years.

When you do the math, you can see that the numbers can get pretty large, and a married couple should prepare for two potential sets of nursing home bills.

Long-Term Care Insurance

Now that you know why you may want to consider the subject, we can take a look at long-term care insurance. During the 1990s, over 100 companies offered this type of coverage, but that number has dwindled to a relative handful so there are very limited options out there.

The premium that you would pay depends on your age, your gender, your health, and the amount of coverage you want to carry. For example, a sixty-year-old North Carolina man who is looking for $200 worth of coverage for up to two years would pay about $1900 a year.

One of the disconcerting things about long-term care insurance is the so-called “elimination period.”

You can pay for your policy for years, and when you file a claim, the coverage does not immediately kick in because of the elimination period. Depending on the policy you have, you are required to pay out-of-pocket for 30, 60, or 90 days.

Another negative is the fact that the premiums can change at any time so they can become unaffordable at some point. Plus, we have emphasized the fact that many people need long-term care, but there are those who do not, and some require assistance for only short periods of time.

In the final analysis, long-term care insurance is an iffy proposition, and many would say the drawbacks outweigh the positives.

Medicaid Planning

There is another way that you can prepare for possible long-term care costs. Medicaid will pay for the custodial care that nursing homes provide, but you can’t qualify if you have significant assets in your own name.

With this in mind, you could convey resources into a Medicaid trust. You would have no access to the principal, but you could accept distributions of the trust’s earnings while you are living independently.

If and when you apply for Medicaid, the principal would not count if you fund the trust at least five years before you seek Medicaid eligibility.

Take Action Today!

We are here to help if you would like to create a nursing home asset protection plan. You can schedule a consultation appointment at our office in Charlotte or Huntersville, North Carolina, if you call us at 704-944-3245.

The number in Ashland, Kentucky is 606-324-5516, and the number in Florence, Kentucky is 859-372-6655.  Or you can fill out our contact form if you would prefer to send us a message.