Should Senior Citizens Have Long-Term Care Insurance?

long-term care insurance

A lot of people receive a rude awakening when they learn about living assistance. The first surprise is the fact that 52 percent of seniors will need professional long-term care. Over one-third will reside in nursing facilities, and Medicare does not cover custodial care.

Assisted Living Costs

According to the state of Connecticut, the average cost for a month in a nursing home is $13,863. A married couple may incur two different sets of bills, and more than 50 percent of people that need paid care receive the assistance for more than a year.

Long-Term Care Insurance

Now that you understand the unpleasant truth about custodial care for seniors, we can look at long-term care insurance. As you would anticipate, the premiums are more expensive as you get older.

The American Association of Long-Term Care Insurance tells us that a 55-year-old woman can expect to pay about $1,500 a year for $165,000 of coverage. Premiums go up annually, and someone this age may require nursing home care after paying premiums for 25 or 30 years.

The so-called elimination period is another major negative that you should take into consideration. You pay your premiums for all of these years, and when you finally make a valid claim, they do not cover your costs right away.

Depending on the terms of the policy, you have to wait out an elimination period that can be 30 days, 60 days, or 90 days. During this interim, you are required to pay out-of-pocket, and this certainly eats into the value of the long-term care insurance.

Another Option

You can decide if long-term-care insurance is a good purchase, but when you are doing so, you should consider the fact that there is a viable alternative. Medicaid does cover long-term care if you can gain eligibility, but there is a $1600 asset limit in Connecticut.

Your home doesn’t count, and that’s the good news, but the Medicaid estate recovery mandate is the bad news. If your property is in your personal possession when you pass away, it would be part of your estate. As a result, Medicaid could place a lien on the property under most circumstances.

What’s the solution? You can establish and fund an irrevocable trust long before you think that you may need long-term care. Advance planning is necessary, because there is a five year look back period. The trust must be funded at least five years before you apply for Medicaid.

A lot of people rely on income that is generated by their invested assets. When you implement this strategy, you can transfer the principal into the trust. You would still be able to accept distributions of the earnings, so your income stream would not be interrupted.

Your home can also be conveyed to the trust to protect it during the Medicaid estate recovery phase. If you ultimately apply for Medicaid at least five years after you take these steps, the property in the trust would not count.

Attend a Complimentary Seminar!

We have some seminars coming up in the near future, and we are looking forward to meeting some of our neighbors. They will cover all the most important topics, and they are held at nice locations in our service areas. You will learn a lot if you join us, and you will make an initial connection with one of our attorneys.

The dates are posted on our seminar page. If you decide to attend one of these events, please follow the instructions to register so we can reserve your spot.

Are You Ready to Act?

If you are here because you are ready to work with a Glastonbury, CT estate planning lawyer to put a plan in place, call us at 860-548-1000 to schedule a consultation appointment. There is also a contact form on this site you can fill out if you would rather send us a message.

Jeffrey A. Nirenstein, Estate Planning Attorney
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