We are going to look at long-term care insurance in this post, but many people are not interested in the subject because they harbor certain misconceptions. Before we share information about the coverage, we will provide some clarity so you know why the matter is relevant.
Most Seniors Will Need Living Assistance
It may be to imagine a time when you will not be able to handle all of your own day-to-day needs, but the statistics paint a compelling picture. The average lifespan for someone that is in their mid-60s is another 20 years or so, and life can be very different when you are an octogenarian.
Seven out of every 10 seniors will need some type of help with their activities of daily living, and approximately 35 percent of elders will reside in nursing homes. These figures should be quite eye-opening if you have assumed that you will never need living assistance.
Medicare Won’t Help
The other misconception about the subject is the idea that Medicare will pay for long-term care if you ever need it. Since Medicare is a health insurance program for seniors, and most elders will need living assistance, this is actually a logical assumption.
In spite of the fact that many people would say that it is not fair, the hard truth is that Medicare will not pay for a stay in a nursing home, and it does not cover professional in-home care.
The State of Long-Term Care Costs
It is not easy to pay for a stay in a nursing home on your own unless you have very deep pockets.
Obviously, Manhattan is part of a huge metropolitan area, and the costs vary depending on the facility that you choose. Suffice to say that you can expect to pay at least $150,000 for a year in a private room in a nursing home in our area.
The average length of stay is one year, and 13 percent of people that receive paid care require assistance for five years or more. A married couple may face two different rounds of nursing home expenses, so these costs could have a devastating impact on your legacy.
Long-Term Care Insurance
Now that we have set the stage, we can provide some information about long-term care insurance. About 25 years ago, over 100 different companies offered this kind of coverage, but there are only about a dozen different players in the marketplace these days.
The premium that you would pay is based on your age, your gender, your health, and the amount of coverage you carry. To give you an idea, the estimated monthly premium for a 65-year-old man with a $10,000 per month maximum benefit would be $593 according to Mutual of Omaha.
Plus, there is a so-called “elimination period” that you must accept if you purchase long-term care insurance. If you make a valid claim, you do not receive a benefit for the first 30, 60, or 90 days depending on the policy that you choose.
Since about half of the people that need long-term care receive it for less than a year, this elimination period is a pretty big deal. Plus, premiums can change along the way, so the affordability factor can become cloudy over time.
If the idea of gambling with long-term care insurance is not that appealing, there is another option that may be more to your liking. Medicaid will pay for long-term care, but you cannot qualify if you have significant assets in your name.
That’s the bad news, but the good news is that your home, your vehicle, your personal belongings, household items, and wedding and engagement rings are not counted. There are also allowances for a healthy spouse when their spouse is entering a nursing home.
You could establish and fund a Medicaid trust to divest yourself of countable assets. The principal would not be accessible to you, but you could continue to receive income that is generated by assets in the trust until you apply for Medicaid.
Timing is key, because the trust must be funded at least 30 months before you submit your application for Medicaid coverage.
We Are Here to Help!
Today is the day for action if you are going through life without a nursing home asset protection strategy. We can help you develop a plan that allows you to live comfortably as you simultaneously develop a financial profile that will lead to Medicaid eligibility.
You can schedule a consultation at our Manhattan elder care planning office if you call us at 212-973-0100, and you can fill out our contact form if you would rather send us a message.