Long term care insurance; 5 yr. call back
1. If we have assets of $500,000., do we really need long care insurance? We are both 73 years old.
2. The 2nd question is are you familiar with the 5 year call back of medicare as it relates to nursing homes? It was suggested that we put a large amount of our assets in a revocable trust in our children’s names to protect our assets from the nursing homes. What to do think about this strategy?
Terry Says: Well, lets start by saying you’re getting terrible advice from whoeveer made that suggestion! Don’t listen to anything else he/she has to say on the subject!
The cost of long term custodial care, even at home, is now running more than $5,000 per month. In a nursing home or assisted living, you can expect to spend a lot more — depending on where you live. So how long do you think your savings would last at that rate — remembering that you have other expenses of one or both of you remains at home. Now, if you own your own home, a reverse mortgage could help with some of those expenses — as long as you stay at home.
But if one of you needs care, what will be left for the other?? That’s why people buy at least a small amount of long term care insurance. You could even take $100,000 of your savings and invest it in an insurance policy (a “combo” policy) that would allow the cash to be leveraged for long term care, but if it is not used for care your beneficiary would get the death benefit.
It’s NOT Medicare that provides long term care. In fact, Medicare only provides a limited number of days of skilled home nursing care, and only after a hospitalization.
What you’re referring to is the state MEDICAID program — for the impoverished. After you spend ALL your money (leaving only a small amount for your spouse to live on), then the state will take over and pay for your care. BUT this will likely only happen in a state-funded nursing home! (If you live in Illinois with its budget crisis, you know how poorly those places are funded!)
The “lookback” period you refer to is the state’s right to look back into your financial affairs for 5 years (in some states it is a longer period) to see if you transferred asssets to your children, for example, in order to qualify for Medicaid.
But you may never need long term care — and it is crazy to give away all your assets now, at age 73, to your children thinking that might be the case! That is just a recipe for disaster — being at the mercy of your kids who have their own ideas about how they want to spend the money you have transferred to them.
To find out more about what kind of LTC insurance policy would be affordable go to www.magaltc.com or call them at 800-533-6242. And get a new advisor! (It’s time to update your estate plan anyway, so read this week’s column!)
