When creating your overall estate plan, a long term care plan should definitely be part of the discussion. You may feel overwhelmed by the many policies and products you have heard about and don’t quite understand. However, before deciding whether any of these are right for you, it’s important to review all your elder care options. It is best to work with a professional elder law attorney to guide you through this process.
What is Long Term Care?
Long term care is care that you need if you can no longer perform everyday tasks by yourself. This can be due to chronic illness, injury, disability, or simply aging. It is not care to cure you; it is ongoing care that you will likely need for the rest of your life. This means you may need help with activities of daily living, such as bathing, dressing, eating, and more.
Long term care also includes the supervision you might need due to a cognitive impairment like Alzheimer’s disease.
What is an Elder Care Plan?
An elder care plan can take several shapes. You will be protecting yourself and your assets by creating an elder care plan. They should involve financial planning, medical planning, and family care planning. Each type of plan plays its own role in your overall plan and should be reviewed to determine whether you will need a long term care insurance policy or can self-insure.
What is Long Term Care Insurance?
Long term care insurance policies are available to help cover the costs in a nursing home or in-home skilled nursing care. Like most insurance policies, your best value comes in purchasing it before you need it. Long term care insurance may not be available, or it will be extremely expensive if it is already clear that you need skilled care.
Costs for individual long term care insurance policies can vary greatly and can be difficult to estimate. Additionally, there are new types of long-term care policies on the market which could be a better fit for your situation depending on your financial picture and your health. However, an independent insurance broker should be able to shop among several different insurance companies to find the best price for your situation. This will allow you to make an informed decision on whether or not the policy is right for you.
Do You Need an Insurance Policy or Can You Self-Insure?
Assessing your financial situation and whether or not you have adequate assets to cover potential long term care needs is key to deciding whether or not you need a long term care insurance policy. If you have a high net worth, you can set aside a pool of money to pay for your care as you age. However, if this is not the case, you need to consider whether you can afford to pay the long term care premiums throughout your retirement or whether you will plan to deplete your assets and utilize government assistance programs such as Medicaid.
As previously stated, purchasing a traditional long term care policy locks you into a given premium payment (there are alternative types of long-term care policies that are now available). With your financial professional, you should make projections on whether or not this makes sense. If you can maintain your retirement lifestyle and afford premiums, you can likely protect some of your estate and pass it on to heirs. This is important to many people and included in their decision-making process.
Alternatively, you may decide it is not worth paying the insurance premium. In this scenario, when making a permanent move to a nursing home your major assets are no longer needed. These assets can be sold to pay for care.
When these assets are nearly depleted, Medicaid will step in to pay for remaining long term care. Beware though, not all care facilities accept Medicaid. If you intend to use Medicaid, factor that into your decision when selecting a care facility.
Additionally, it should be noted that if you are married and only one spouse needs skilled-care, Medicaid provides some protections for the remaining spouse to ensure they can live reasonably comfortably in their house and keep enough assets and income to live on.
The Choice is Yours
All of the information and scenarios discussed above should be reviewed and talked through with an elder law attorney. Your lawyer can help facilitate your elder care plan and document how you want to handle your long term care. Having these detailed discussions now will allow you the greatest amount of time and flexibility in making decisions.
We know these plans and decisions are complex and overwhelming. We are here to help you dissect the information, create a plan, and execute it to your wishes. Please contact us today to set up a meeting.