Long-Term Care Insurance Part of the Asset Protection/Estate Planning Toolkit
Planning your legacy responsibly often means having some sort of plan
for the possibility of large bills for long-term care, be it in-home
care, assisted living or nursing home care. I was reminded this morning of the value of long-term care insurance as an estate planning and asset protection tool.
From the asset protections standpoint, it makes little sense to me to plan to protect your assets from the unlikely but potentially devastating effects of a large lawsuit but not protect from the more likely and possibly more devastating effects of long-term care. If you can afford it, long-term care insurance is a better option than planning for Medicaid because if you rely on Medicaid to pay your long-term care bills you have fewer options in terms of the type of care, the facility where you receive care, and the care you receive. On the latter, I don't necessarily mean that a Medicaid-funded patient gets worse care than a self-pay patient, but that a self-pay can have a single room or stay in assisted living longer with supplemental care, etc. And let's face it, the facilities I have been in that have all or most of their patients funded by Medicare are, as a rule, not as pleasant as facilities where some or all of the patients are self-pay.
In estate planning, if you are trying to make sure that you are managing your financial legacy to further your values, I rarely hear from a client that their goal is to go bankrupt on their health care. Having said that, plenty of my clients are prepared to spend all their money on their health care if needed, but long-term care insurance may prolong your ability to pay for your care or protect a financial legacy for your family.
That all assumes that you can afford long-term care. It can be pricey, and sometimes it just doesn't make financial sense. If you have to give up basic necessities to pay the premiums for insurance you hope you'll never need, then it might not be the right choice for you. But there are lots of variations to long-term care insurance, and you may be able to find a policy with a longer self-pay period or larger deductible or smaller lifetime benefit that you can afford. To start, take a look at this great publication from the federal government on long-term care insurance.
From the asset protections standpoint, it makes little sense to me to plan to protect your assets from the unlikely but potentially devastating effects of a large lawsuit but not protect from the more likely and possibly more devastating effects of long-term care. If you can afford it, long-term care insurance is a better option than planning for Medicaid because if you rely on Medicaid to pay your long-term care bills you have fewer options in terms of the type of care, the facility where you receive care, and the care you receive. On the latter, I don't necessarily mean that a Medicaid-funded patient gets worse care than a self-pay patient, but that a self-pay can have a single room or stay in assisted living longer with supplemental care, etc. And let's face it, the facilities I have been in that have all or most of their patients funded by Medicare are, as a rule, not as pleasant as facilities where some or all of the patients are self-pay.
In estate planning, if you are trying to make sure that you are managing your financial legacy to further your values, I rarely hear from a client that their goal is to go bankrupt on their health care. Having said that, plenty of my clients are prepared to spend all their money on their health care if needed, but long-term care insurance may prolong your ability to pay for your care or protect a financial legacy for your family.
That all assumes that you can afford long-term care. It can be pricey, and sometimes it just doesn't make financial sense. If you have to give up basic necessities to pay the premiums for insurance you hope you'll never need, then it might not be the right choice for you. But there are lots of variations to long-term care insurance, and you may be able to find a policy with a longer self-pay period or larger deductible or smaller lifetime benefit that you can afford. To start, take a look at this great publication from the federal government on long-term care insurance.
Posted by Karen Brady at 5/31/2011 10:39 AM 
Categories: Estate Planning, Asset Protection
Tags: longterm care longterm care insurance LTC insurance Medicaid estate planning asset protection planni
Categories: Estate Planning, Asset Protection
Tags: longterm care longterm care insurance LTC insurance Medicaid estate planning asset protection planni
Most people overestimate the cost of a good long-term care policy. A healthy, married couple in their mid-fifties, can share a policy that starts off with over a half million in benefits for about $100 per month per spouse.
There’s a new type of government-approved long-term care policy that can protect your assets from Medicaid even if the policy runs out of benefits.
Here’s an explanation of how these policies work:
http://bit.ly/How-Partnership-Policies-Protect-Assets
Scott
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Scott, Thanks for sharing your blog post about long-term care insurance. I agree that the costs of LTC insurance aren't always as great as people fear, and can often be managed by designing the policy to cover financial catastrophes rather than every possible expense. LTC insurance premiums can be out of reach for some, but then you have to balance it against what you are trying to protect.
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Nice post! Partnership policies are meant to protect people from asset recovery. Medicaid qualifies individuals with its minimum asset/income threshold, so people who have more than that are forced to drain their assets
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