PART OF COMPREHENSIVE ESTATE PLANNING
includes planning for care during one’s advanced years. How one wants to live; where one wants to live; and how one will pay for care is critical information to be built into an estate plan. More than 60% of people over 65 years of age will require nursing home or in-home care as they age. The cost of that care in Connecticut and New York can easily exceed $10,000 per month. With statistics as compelling as these and rising health care costs, long-term care has become an important topic and priority. Careful decision making and planning today can provide for comfort and stability tomorrow.
CARE OPTIONS
In-Home Care. Many clients wish to receive care in their homes and require varied degrees of assistance. There is often an expectation that their children or other family members will provide that care. Sometimes, however, the amount of care needed is more than family members can provide. Additionally, safety at home is also a significant consideration. For example, Alzheimer’s and dementia patients frequently require 24-hour monitoring. This level of care may be best provided in a facility with a memory care unit. In-home care support through agencies is readily available today. Current costs range from $22 to $27 per hour depending upon the level of care required.
Assisted Living. Others prefer the idea of assisted living rather than in-home care because of the many benefits this type of arrangement provides. Facilities offer a range of social activities; a chance to develop and maintain friendships; mental stimulation; and medical services. Many facilities offer different levels of care for residents that can be provided as their needs change. Costs for assisted living vary depending on needs and services provided.
PAYMENT OPTIONS
Self Pay. Many clients opt to self-insure through savings or investments. If they are part of the 40% who never require assistance, they will still have the saved funds to pass along to their children or spend on a great vacation!
Medicaid. Medicaid may be available for seniors without other financial resources who require long-term care in a nursing home. To be eligible for Medicaid, the applicant can only have the following resources: (a) no more than $1,600 in assets; (b) a pre-paid burial plan (up to $5,400 if irrevocable); (c) a burial plot, casket and headstone; (d) life insurance with a face value
of no more than $1,500; and (e) personal effects. (If the applicant is married, the community spouse may be able to retain up to $119,220 and the house is not counted as long as the spouse is living there.) Planning for eventual Medicaid qualification is a must. The process typically requires a 5-year planning window, often involves significant gifting to “spend down” assets, and may have adverse tax consequences depending on different factors.
Long-Term Care Insurance. Not everyone who needs long-term care may be eligible for Medicaid. Additionally, Medicaid may not cover the type of care needed to stay in one’s home, and generally does not cover assisted-living facilities, only skilled nursing facilities. An alternative to private pay for care is coverage under a long-term care insurance policy. There have been a number of changes in the long-term care insurance industry over the last decade, resulting in public skepticism. In response, the industry is now offering products which have set premiums and a death benefit if care benefits are not used.
LONG-TERM CARE INSURANCE POLICY CONSIDERATIONS
Like other types of insurance products, long-term care insurance is an investment now towards future care needs. It does not replace medical insurance, but rather provides funds to assist with in-home care, assisted living or skilled nursing expenses.
Clients need to review the terms of a long-term care insurance policy carefully when deciding whether to purchase one and what type of coverage to buy. The following factors should be considered:
• What does the policy cover? A good policy will cover nursing home, assisted living and in-home care. While most policies now cover all three options, coverage amounts may vary.
• Does the policy have an inflation rider? The amount of coverage needed based on today’s cost of care is likely to increase over the next 5, 10 or 15 years. A comprehensive policy will offer inflation protection, sometimes for an additional cost.
• Does the policy have an elimination period? An elimination period is the length of time during which one will have to cover his or her costs before coverage under the policy begins. Typically, this is 90 – 150 days.
• Is the insurance company a quality provider? Companies providing long-term care insurance policies have changed substantially in recent years. Some companies that used to offer policies no longer do so. Clients should choose an insurance company that is highly rated and regarded.
• Finally, what overall coverage is needed? Each policy will have a daily benefit amount, which is the amount of coverage the policy will pay each day for care. Each policy is also likely to have a lifetime maximum. Clients must decide these amounts based on anticipated coverage needs. It is helpful to research what the average cost is today to receive care in a skilled nursing facility, assisted-living facility and at home with home health aide support. For more information, please contact Heather J. Lange (hlange@brodywilk.com) or Jennifer A. Basciano (jbasciano@brodywilk.com).