The cost of long term care ranges from $3,000 to $12,000 or more a month. The cost will continue to rise. These costs are unsustainable for many, if not most, of the population. Many people are forced to use substantially all of their assets to cover the cost of their long term care. Once assets have been spent, Medicaid, the payor of last resort, pays for the cost of care.
Typically, long term care services are required by people who are unable to perform two of the six basic Activities of Daily Living: bathing and showering, dressing, eating and feeding, functional mobility, personal hygiene and grooming, and toilet and hygiene. Long-term care services are not limited to care received in a nursing facility, frequently it is provided in the home and or an assisted living facility. Similarly, long-term care services care are not limited to the elderly. It is utilized by people of all ages who have been in an accident, fallen ill, or become chronically sick.
In addition to planning your estate to help protect assets from the high cost of care one can purchase a long term care insurance policy to insure all or part of the risk. Long-term care insurance is a type of insurance designed to help pay the cost of long-term care services. Long-term care insurance can help a person in need of care stay in his or her home, it can provide financial security and the freedom to decide where to receive care, and the ability to rely on professional care providers, rather than family members who may not have the training or the time to provide adequate care.
With the goal of reducing the rate of ever increasing Medicaid costs, the federal government enacted the so-called “Partnership Programs” for long-term care insurance. A Long-Term Care Partnership Program is an arrangement between the federal government, those states adopting the program, such as New Hampshire, and private insurance companies to offer long-term care insurance policies. Through the Program, which bears a dollar-for-dollar asset protection feature, an individual may protect his assets from Medicaid’s spend down rules up to the amount of coverage purchased. For instance, if a person purchases a $350,000 long term care insurance policy that qualifies under the Program, he will be able to protect that amount of his estate for his beneficiaries—he will not have to spend that amount for his care. In other words, the policies offered under these plans are not countable assets for Medicaid planning purposes. Knowledgeable long term care insurance colleagues recommend purchasing a plan before age 65, when the price becomes more than many people can comfortably afford.
A long term care insurance policy that qualifies under the Partnership Program coupled with an up to date estate plan can go a long way toward providing appropriate care and protecting assets for a spouse and other beneficiaries.