PLANNING FOR THE COST OF LONG-TERM CARE

Long-term care insurance may be purchased to meet the potentially devastating cost of long-term nursing home confinement.  However, as with other insurance coverage, not every client is willing or able to pay for needed long-term care insurance. Others may not medically qualify for such coverage.  Still others do not appreciate how very important long-term care insurance may be.

Many have heard that they can take advantage of Medicaid - government welfare program - to pay for the cost of a nursing home stay.  Some have made plans to become poor so that they will be eligible for Medicaid’s benefits when the time comes.

Is Medicaid Planning the right strategy?

Medicaid is a federally created welfare program that is administered by each of the state governments.  Prior to becoming eligible for Medicaid long-term care benefits, an applicant must qualify both medically and financially.  Determining whether an individual qualifies financially for the state’s version of Medicaid requires the application of both an asset-based and an income-based test.  The types of financial standards that are applied depend on whether the applicant is single or married.

Medicaid strictly limits the amounts and kinds of assets a prospective single beneficiary can keep.  For married couples, the rules also require the at-home spouse to contribute assets and income to the care of the spouse in a facility.

Advising clients so that they can maximize their chances of qualifying financially for Medicaid is called Medicaid Planning.  Among the Medicaid Planning techniques that can be considered:

• Make gifts to family members
• Transfer assets to a spouse
• Convert money into assets that Medicaid does not count
• Buy an immediate annuity
  

Medicaid Planning is not without risks and drawbacks:

• Some techniques do not give immediate positive results
• Most techniques involve a significant loss of control
• Not all of these techniques are legally feasible in every state
• If Medicaid is never needed, the costs of planning are not recovered
• All of these techniques involve certain costs or loss of control.

For those who have no other choice for paying long-term care expenses, Medicaid Planning must be considered.  Others should consider stand-alone long-term care insurance as an alternative to Medicaid.  For those who can afford them, long-term care insurance products provide more flexibility and choices in dealing with the costs of care.

I hope this information is helpful.

Please contact the Law Offices of William H. Copperthwaite Jr., L.L.C. if you have any questions.

Please note that the information contained in this summary is intended for informational purposes only and is not to be considered tax/legal advice. For specific advice, please contact the Law Offices of William H. Copperthwaite Jr., L.L.C.