Florida Elder Law Blog - A blog by Elder Law Associates, South Florida's premier elder law attorneys, who handle elder law, medicaid planning, guardianships and much, much more.
It might sound strange to be told to insure your retirement funds, but after working hard and diligently saving all that money, wouldn't you want to make sure that the funds will be there for you when you need them?
As you move into retirement, you are also moving towards age-related health problems. Events beyond your control, such as stroke, heart disease and cognitive impairment can change one's way of life.
Many people are under the impression that government programs such as Medicare or Medicaid will cover the costs of long term care. Medicare will cover some skilled nursing for a limited period. Medicaid will only cover long term care costs for impoverished individuals. Health insurance does not cover nursing home or other long term care costs except for short-term rehabilitation.
Out of pocket costs for needed long term care resulting from age-related health problems such as home care, nursing home or assisted living will quickly deplete retirement funds and leave the remaining healthy spouse impoverished.
Long term care insurance is the answer to insure your retirement funds and provide protection so that the money stays intact and at the same time insurance provides a way to pay for elder care services.
In his book "The Total Money Makeover," Dave Ramsey says of long term care insurance, "If you are over sixty, buy long term care insurance to cover in-home care or nursing home care. The average nursing home stay costs $40,000 per year, which will crack and scramble a nest egg in a heartbeat. Dad in the nursing home can use up Mom's $250,000 savings in just a few short years."
Long term care Insurance to insure your retirement makes sense. You insure your car against damage, your home against fire, and you purchase life insurance, so why not insure what can be the largest and most devastating risk to you and your family? And unlike the other risks you insure against, long term care is the most likely to happen. Long term care insurance will also help you keep your independence and dignity and allow you to make choices about where you want to spend your final years.
Here are some specific reasons for buying long term care insurance:
• If you are married and you have a need for long term care, your spouse will be able to pay for an outside caregiver and receive needed rest and recuperation.
• If your children promise to take care of you, then when the time comes that you need care, insurance will help them do that by paying for aides to help with tasks such as bathing and incontinence.
• If you are single and a need for long term care arises and you have no family who can help you, insurance can pay for and coordinate that care.
• If you have the desire to leave assets behind when you die, insurance will help preserve those assets from the cost of long term care.
You should also consider buying long term care insurance at a younger age. There is an advantage for doing this. The premium is lower.
For example, a person, currently age 45, buying a typical policy with a spouse, could spend $21,146 in total premiums to age 78.
Suppose this same person chooses to wait to buy the equivalent coverage at age 65.
If that same policy were available in the future, the couple that waits could pay $52,566 in total premiums over their 13 remaining years to age 78. Because they waited, they would pay 2 ½ times more for the same policy.
In addition to the rates going up with age, the health qualifications will be stricter and development of health problems related to aging may even disqualify a person from obtaining a policy.
There are dozens of long term care insurance companies selling a multitude of different policy options. It can become very confusing. For each policy, there are literally thousands of benefit combinations for home care, assisted living, nursing home care, waiting periods, payment amounts, inflation riders, and the list goes on.
You can take the time to do your own research or find a competent long term care insurance agent. Here is a checklist of some of the things you need to know before you purchase a policy.
LONG TERM CARE INSURANCE BUYING CHECKLIST
The more "yes" answers you get the better off you are.
1) Is the insurance company rated by A. M. Best (the rating company) with a rating of at least A, A+ or A++?
2) Is it a large diversified company with deep pockets and selling more than just long term care insurance?
3) Is the insurance representative an expert in long term care insurance? (Because of its complexity, almost all LTCi experts only sell LTCi; they seldom sell anything else.)
4) Does the representative have a degree and/or industry financial designations?
5) Does the representative own a personal long term care insurance policy for himself or herself?
6) Is the policy you like tax qualified, and if not, do you understand the ramifications?
7) Are there at least 6 ADL's (Activities of Daily Living) allowed for in the benefit certification?
8) Does it allow "standby assistance"?
9) Is it a "pool of money" as opposed to a "stated period"?
10) Is it "integrated" as opposed to "2-pool"? (2-pool is not allowed in many states.)
11) Do you understand how the elimination period works? (This is extremely important.)
12) Does it have prohibitive cost containment provisions?
13) Is there any "capping" or other future reduction of automatic benefit increase riders?
14) Do you understand how the waiver of premium works?
15) Does the assisted living facility benefit pay the same as for nursing home?
16) Are you buying adequate home care coverage?
17) Does the company have a history of premium rate stability without periodic increases?
18) Does the policy pay for homemaker services?
19) Does the policy offer an alternative plan of care for services that don't exist today?
Labels: long term care, Medicaid Planning, Medicare
As our population continues to age, more and more individuals are concerned about how they will pay for care as they get older. Often individuals and families find that they are unable to take care of themselves and need assistance.
As medical costs have continued to rise, so have the costs of home health care. As a result we are seeing more individuals need the assistance of Medicaid. Too often we find individuals who have received advise from family members, friends, and professionals who do not understand Medicaid and only deal with elder law or estate planning issues. While it may be great to avoid the costs and fees associated with probate, what if you end up being disqualified from nursing home coverage. This could cost far more than the savings on probate.
Florida is a great state to live at the time you need Medicaid coverage because of the large exemption allowed on one's home. Generally you can protect up to $500,000 of equity in a Florida homestead. Unfortunately in an effort to save a few thousand dollars many individuals transfer a partial ownership in the property to their children with rights of survivorship. Often this is done with a life estate deed.
This can cause many problems for the owner in the event they ever need nursing home coverage. There is way to accomplish similar results without risking the tax detriments, gifting issues, loss of control, and Medicaid eligibility - use a Florida Enhanced Life Estate Deed.
If you would like a review of your estate planning that takes into account Florida Elder Law, Medicaid planning, and probate and tax issues Contact a Florida Elder Law Attorney
who is familiar with estate planning and medicaid planning.
-- Ellen Morris, JD
Labels: florida elder law, Florida Elder Law Attorney, medicaid