Paying for Long-Term Care – A Creative Approach

Medicaid word cloudThe business of selling long term care insurance has changed dramatically over the last 20-30 years, which in turn has affected how senior citizens protect their assets.

What was once a busy marketplace of more than 100 insurers vying for long-term care dollars, has shrunk to a group of fewer than 20.

This was because many insurers drastically underestimated how long their policy holders would live, and how many claims they would file.

As the Wall Street Journal reported earlier this year, the insurance industry is in the midst of something of a panic trying to cover its losses, which means that many senior citizens who have long-term care policies are seeing significant rate hikes, some as high as 90 percent.

This leaves them with an almost impossible choice: pay this steep increase or walk away from coverage you’ve been paying into for years, if not decades.

Is there a better way?

And most of us can agree that this is no choice at all. No one wants to pay exorbitant premiums, but it’s also hard to picture life without the safety net offered by LTC insurance.

That’s where Medicaid planning can help. By shedding your assets until you’re poor enough to qualify for Medicaid, you can gain coverage for nursing home care.

This doesn’t mean you’re just ridding yourself of all your money and leaving nothing behind for your loved ones. Rather, you’re just shifting your assets to a designated beneficiary until you reach the under-$2,000 threshold to qualify for Medicaid.

This is where the planning aspect of Medicaid planning comes into play. You can’t simply transfer all of your assets to your children and expect to qualify for Medicaid.

Medicaid has a five-year lookback period and may penalize you for any assets transferred during those five years.

But if you can wait those five years, you can plan and find the right method to transfer your assets, such as an annuity or an irremovable trust. Assets placed in these trusts are no longer within your control, and as such aren’t available to certain creditors.

Finding the right elder law attorney

By working with a qualified elder law attorney, you can find the right vehicle which to transfer your assets and qualify for Medicaid.

Make sure the attorney you choose is someone who has kept up to date on Medicaid changes. Congress is often debating new legislation that affects the program, and Medicaid requirements can vary from state to state and even county to county.

The cost of paying for long-term care can be close to $100,000 a year, a price that would leave most people’s assets quickly wiped out – assuming they had that much in the first place.

Medicaid can be your solution, and the sooner you start planning, the better. Contact Newman Elder Law today to get started. Our attorneys know the ins and outs and Medicaid planning and can help you and your family protect your assets.

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