Long-term Care Insurance
Various Long-Term Care Insurance strategies are designed to protect your assets, your partner’ s income, the assets you plan to leave to your children, your retirement income and even your home. Without LTC protection, every family runs the risk of long-term care costs depleting income and assets.
Long-term care costs vary by state, but the average cost in the USA is over $80,000 per year for semi-private room nursing care. Pay that amount for 5 years and your accumulated assets take a $400,000 hit. Instead of leaving your heirs a planned inheritance, you end up being a financial burden.
Applying two or three hundred dollars per month toward LTC insurance premiums, goes a long way in protecting those assets your family worked so hard for.
Partnership-Qualified Long-Term Care Insurance Policies
These plans are a federal government initiative, and are a partnership between states and private long-term care insurance companies to incentivize residents to purchase certain long-term care insurance plans. These partnership-qualified LTC insurance plans provide Medicaid asset protection, which allows you to protect one dollar of assets, for every dollar your insurance plan spends on your long-term care.
For example, say you purchase a partnership-qualified LTC insurance policy that paid you $200,000 in benefits, you will be allowed to protect $200,000 in personal assets, in addition to the Medicaid eligibility amount you can keep, and still qualify for Medicaid. This allows you to later, pass a full $200,000 of assets to heirs, even though you are on Medicaid. Even better, this set-aside is not subject to Medicaid state recovery of assets after your death.
Flex Plan Advantage Available in All States
Premier Single-Premium Plans Available in All States (except New York)
Partnership-Qualified Plans Available in All Blue States on the Map
Qualifying for Medicaid
To qualify for Medicaid LTC services, you must meet income levels as well as “spend down” your assets to a minimum level – typically around $2000 for an individual. Countable assets include savings accounts and investments, but exclude personal possessions, one car, a limited amount of life insurance and certain other items. Your spouse can keep your home if still living there while you are in a care facility, subject to maximum values.
Transferring Assets to Meet
Impoverishing mom and dad, to qualify for Medicaid was once common, but states are tightening their restrictions. New “look back” periods have increased to five years. This means any transfer of assets within five years of when you apply for Medicaid will trigger a penalty period or a period of ineligibility. The intent is to stop capable people from transferring assets one day, and qualifying for public assistance the next. Worse, following your death, the state may recover from your estate whatever Medicaid benefits it paid for your long-term care services (within that state’s look back period).
Inflation Protection Requirements
Most states require that partnership-qualified LTC insurance plans provide for some level of inflation protection buy-up. By purchasing the buy-up inflation protection, your policy benefits will be protected against the historical rate of inflation. Whether state required, or not, it is always a wise idea to protect your policy against inflation.
Should We Transfer Our Estate Now?
Medicaid look back rules, if you plan to spend down or transfer assets. Upon your death, your estate can be asked to repay any Medicaid funds paid to you, if: Medicaid was paid within a five-year lookback period, from the date of your death, backward, to the date of your application for Medicaid.