LONG TERM CARE PLANNING

LONG-TERM CARE PLANNING

What if you or your spouse needed to go into a nursing home?  Most of us think, “That won’t happen to me”.  In fact, according to the U.S. Department of Health and Human Services, at least 70% of all people over 65 will need long‑term care at some point.[1]

Medicare and most health insurance plans, including Medicare Supplement Insurance (Medigap) policies, don’t pay for long-term care.

So how do you pay for it? YOU MUST PLAN IN ADVANCE. 

There are three options for paying for your long-term care.  The first option is to Self-Fund, in other words, use your personal assets to pay for care.  In Montana, the average cost for a nursing home is over $6,050 per month.[2]  For a two–year stay, this amounts to a over whopping $147,000!  That can quickly wipe out your entire life savings. 

Another option is to purchase Long-term Care Insurance.  This type of private insurance can help pay for many types of long-term care.  Typically, long-term care policies are limited to a certain dollar amount they will pay per day, and the number of days they will cover.

Montana is a Medicaid Partnership state.  This means that people who purchase qualifying long-term care policies are subject to special rules regarding eligibility for Medicaid. These rules allow assets equal to the amount of benefits received through the policy to be disregarded for purposes of calculating Medicaid eligibility.[3]  For example, if you purchase a $100,000 long–term care policy, Medicaid will exempt $100,000 of your personal assets when determining eligibility.

There are two downsides to private long-term care insurance.  First, it can be expensive.  Premiums generally increase every year, and the older you are, the more expensive it is.  The other downside is that it must be medically underwritten.  This means that if you are sick or have had health issues in the past, you probably won’t qualify.

The third option for paying for your long-term care is Medicaid.  Unlike Medicare, which is government sponsored health insurance, Medicaid is a joint federal and state program that helps pay for certain health services for people with very limited income and resources. 

As part of the eligibility criteria, applicants must have limited assets.  For regular Medicaid, total countable resources must be at or below $2,000 for an individual or $3,000 for a married couple in 2014.[4] Prior to becoming eligible, Medicaid will require a “Spend Down”, that is, the process of spending down your assets to reach these levels which means that you pay the providers.