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FUNCTIONALITY – âDo I have to take out long-term care insurance? I’ve been asked this question several times in my career, and the answer is simple: it depends.
It depends on several things, including your assets, your marital status, your income and your state of residence.
A recent Forbes article stated that less than 8% of Americans have long term care insurance and less than 10% even have a plan in place. Most people just aren’t ready for the expense and life change that a long-term care situation would bring. The costs can easily exceed $ 7,000 per month or more, and frankly, most people cannot afford this expense.
A lot of people want to depend on the government for this level of care, but the truth is Medicare won’t cover your long-term care needs. Medicare only provides approved expenses and some skilled and rehabilitative care. Coverage can begin after three days and nights of hospitalization and only for a maximum of 100 days per diagnosis.
What happens after 100 days? You are alone.
Our country has put in place a social protection system called Medicaid. Medicaid will not pay for necessary care until you qualify in your state of residence and your assets are at their minimum required level. Some states only allow a balance of $ 2,000 in total assets.
Long term care insurance is also expensive and not easy to purchase. Health issues can often end any possibility of owning insurance; your current health is a factor when purchasing a policy. Most people don’t realize that long-term care insurance premiums aren’t guaranteed, and companies can increase premiums to match their expenses with the approval of the State Department of Insurance.
Modern long term care policies can offer benefits outside of the actual nursing home. Some people assume that long term insurance only pays for nursing home care, but this can be misleading. Insurers define long-term care as assistance provided to a person with a condition or illness that limits their ability to perform normal daily activities. Long-term care insurance can also provide funds for rehabilitative care and various types of assisted home care.
Planning can lead people to consider other options to cover these expenses. Some life insurance policies offer long term care riders that can help you, but eligibility for the life insurance policy can also be an issue. Some annuities also allow long term care riders to be attached, which may offer some protection, but the value of the annuity account could also be depleted.
Many people just think that they can give property to their heirs and protect the property. This is simply not true. Almost all gifts given in the past five years (except between spouses) can be canceled, and the asset was recovered from the settlor’s estate.
Whatever your final decision, which may include self-financing, long-term care insurance, government benefits, or family-provided care, chances are over 70% of people over 80 years need some kind of help. Planning is essential, and the sooner discussions begin about this category of future responsibility, the better off you are.
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