Long-term care insurance has evolved over time, and it continues to be a valuable form of insurance held by a minority of individuals. If you have it today, congratulations! Most people we see do not have long-term care insurance. It can be a very valuable insurance as you age.
If you don’t have it today, you may be wondering what should I do as my next steps?
As always, the best next steps will heavily depend on your circumstances, which include your age, health status and health history. There are a few options to consider if you don’t have long-term care insurance.
1. Buy Long-Term Care Insurance – The industry continues to evolve, so don’t think you’ve waited too long to purchase long-term care insurance. All of us have to make our own business decisions, but there are alternatives available for buying long-term care insurance. It is most important for individuals to consult with an insurance professional who is specifically aware of the multiple long-term care insurance options. Long-term care insurance is a specialized area of insurance, so it is critical to work with someone who has this expertise.
2. Consider Hybrid Insurance, or Combination Insurance Solutions – These combination solutions bundle life insurance and long-term care insurance together in one solution. In some ways it is the best of both worlds for the insurance buyer. The details of the solutions are important, so it is critical to work with the right insurance professionals. If you don’t end up needing the long-term care insurance during your lifetime (i.e. no long-term care before death), the life insurance is there to support your family and loved one. If you need the long-term care insurance then you use it, and any funds remaining can fund a life insurance alternative. Again, please work with an insurance professional with expertise in long-term care insurance to decide what is best for your situation.
3. Consider Asset Transfer Alternatives for Long-Term Care Insurance – The industry has multiple solutions where assets (i.e. other investment accounts) are transferred in return for a combination insurance solution. As an example, people with excess retirement account investments may consider an alternative where retirement account dollars are exchanged for customized insurance solutions. The tax consequences of these solutions become critical, but there are solutions where no tax consequences occur until retirement dollars are used to pay an annual insurance premium. The majority of the retirement dollars continue to be invested in a pre-tax account, and these pre-tax accounts continue to grow for your retirement needs. This is just one example of an asset transfer alternative for long-term care insurance.
4. Self-Insurance Alternatives – Some people can self-insure for their long-term care needs, and some even use self-insurance planning. Working with a financial professional, you would need to complete your own projections of your potential long-term care expenses, and then match this with your investment portfolio projections. Self-insurance is a very reasonable alternative for many clients, but if you are healthy enough to get some form of long-term care insurance, you should still consider acquiring the insurance as a form of asset protection. Clients with sufficient assets to self-insure are really prioritizing how they want to use their assets in the future, and they are calculating their own risks of any expensive long-term care scenarios. Dementia, Alzheimers, Parkinson’s and other long-term care scenarios can become very expensive over an extended period of years.
5. Veterans Benefits – Veterans who have served during certain time periods may also qualify for a veterans’ benefit known as VA Pension benefits, but more commonly known as VA Aid & Attendance Benefits. These benefits are designed to assist the veteran, or their serving spouse, with their long-term care needs. When the veteran can qualify for these benefits, they can become vary valuable for their care at home or in a facility. These benefits will only pay a specific dollar amount per month (depends on the qualifying amount), and these benefits will not cover the full cost of skilled nursing facilities. More information on these benefits, including qualifying dates and benefit amounts, can be found on our website here.
6. Medicaid as an Alternative – Medicaid is a government benefit designed as a last alternative to pay for long-term care benefits for those who qualify. Medicare generally serves as a health insurance alternative for our seniors, but Medicare does NOT pay for long-term care benefits after a short initial period of days. Medicaid planning is a complex area of our elder law practice, and we often assist clients in their efforts to qualify for Medicaid both in Missouri and Kansas. Many clients would be surprised how a small amount of proactive planning can protect assets for their future care needs. Our married, senior clients who are looking to Medicaid as an alternative for their sudden long-term care needs, really need to protect assets for the well spouse when they are going through a crisis health period for the other spouse. Although Medicaid is complex, it is a very valuable benefit that should not be overlooked by clients. After all, we’ve all been paying for it through our working years, so if it is needed, then like any other government benefit, it should be considered. Here are a few other articles on Medicaid Planning, if you’d like to learn more:
How will you pay for your future, unknown, long-term care needs?
Long-term care planning is an overlooked area of client planning. It is also an area of planning where we often need to integrate your financial needs and your legal needs into a coordinated plan. Although long-term care planning can be discussed during the estate planning process, it is usually done as a next step in a client’s planning and coordinated with their financial and investment planning.
We encourage our clients to be informed of their long-term care needs, to increasingly know the alternatives for their individual situation, and we look forward to assisting you with evaluating your alternatives. Please call us at 913-345-2323 if you would like to schedule a consultation.