Florida Elder Law Blog - A blog by Elder Law Associates, South Florida's premier elder law attorneys, who handle elder law, medicaid planning, guardianships and much, much more.
It might sound strange to be told to insure your retirement funds, but after working hard and diligently saving all that money, wouldn't you want to make sure that the funds will be there for you when you need them?
As you move into retirement, you are also moving towards age-related health problems. Events beyond your control, such as stroke, heart disease and cognitive impairment can change one's way of life.
Many people are under the impression that government programs such as Medicare or Medicaid will cover the costs of long term care. Medicare will cover some skilled nursing for a limited period. Medicaid will only cover long term care costs for impoverished individuals. Health insurance does not cover nursing home or other long term care costs except for short-term rehabilitation.
Out of pocket costs for needed long term care resulting from age-related health problems such as home care, nursing home or assisted living will quickly deplete retirement funds and leave the remaining healthy spouse impoverished.
Long term care insurance is the answer to insure your retirement funds and provide protection so that the money stays intact and at the same time insurance provides a way to pay for elder care services.
In his book "The Total Money Makeover," Dave Ramsey says of long term care insurance, "If you are over sixty, buy long term care insurance to cover in-home care or nursing home care. The average nursing home stay costs $40,000 per year, which will crack and scramble a nest egg in a heartbeat. Dad in the nursing home can use up Mom's $250,000 savings in just a few short years."
Long term care Insurance to insure your retirement makes sense. You insure your car against damage, your home against fire, and you purchase life insurance, so why not insure what can be the largest and most devastating risk to you and your family? And unlike the other risks you insure against, long term care is the most likely to happen. Long term care insurance will also help you keep your independence and dignity and allow you to make choices about where you want to spend your final years.
Here are some specific reasons for buying long term care insurance:
• If you are married and you have a need for long term care, your spouse will be able to pay for an outside caregiver and receive needed rest and recuperation.
• If your children promise to take care of you, then when the time comes that you need care, insurance will help them do that by paying for aides to help with tasks such as bathing and incontinence.
• If you are single and a need for long term care arises and you have no family who can help you, insurance can pay for and coordinate that care.
• If you have the desire to leave assets behind when you die, insurance will help preserve those assets from the cost of long term care.
You should also consider buying long term care insurance at a younger age. There is an advantage for doing this. The premium is lower.
For example, a person, currently age 45, buying a typical policy with a spouse, could spend $21,146 in total premiums to age 78.
Suppose this same person chooses to wait to buy the equivalent coverage at age 65.
If that same policy were available in the future, the couple that waits could pay $52,566 in total premiums over their 13 remaining years to age 78. Because they waited, they would pay 2 ½ times more for the same policy.
In addition to the rates going up with age, the health qualifications will be stricter and development of health problems related to aging may even disqualify a person from obtaining a policy.
There are dozens of long term care insurance companies selling a multitude of different policy options. It can become very confusing. For each policy, there are literally thousands of benefit combinations for home care, assisted living, nursing home care, waiting periods, payment amounts, inflation riders, and the list goes on.
You can take the time to do your own research or find a competent long term care insurance agent. Here is a checklist of some of the things you need to know before you purchase a policy.
LONG TERM CARE INSURANCE BUYING CHECKLIST
The more "yes" answers you get the better off you are.
1) Is the insurance company rated by A. M. Best (the rating company) with a rating of at least A, A+ or A++?
2) Is it a large diversified company with deep pockets and selling more than just long term care insurance?
3) Is the insurance representative an expert in long term care insurance? (Because of its complexity, almost all LTCi experts only sell LTCi; they seldom sell anything else.)
4) Does the representative have a degree and/or industry financial designations?
5) Does the representative own a personal long term care insurance policy for himself or herself?
6) Is the policy you like tax qualified, and if not, do you understand the ramifications?
7) Are there at least 6 ADL's (Activities of Daily Living) allowed for in the benefit certification?
8) Does it allow "standby assistance"?
9) Is it a "pool of money" as opposed to a "stated period"?
10) Is it "integrated" as opposed to "2-pool"? (2-pool is not allowed in many states.)
11) Do you understand how the elimination period works? (This is extremely important.)
12) Does it have prohibitive cost containment provisions?
13) Is there any "capping" or other future reduction of automatic benefit increase riders?
14) Do you understand how the waiver of premium works?
15) Does the assisted living facility benefit pay the same as for nursing home?
16) Are you buying adequate home care coverage?
17) Does the company have a history of premium rate stability without periodic increases?
18) Does the policy pay for homemaker services?
19) Does the policy offer an alternative plan of care for services that don't exist today?
Labels: long term care, Medicaid Planning, Medicare
According to some sources, 60% of us will need long term care sometime during our lives. It is important for all of us to prepare for that day when we will need to help loved ones with elder care or we will need elder care for ourselves. Of course, one should always consult with a reputable
Florida elder law attorney before making any concrete plans.
It is simply a fact of life to prepare financially for unexpected disasters by covering our homes, automobiles and health with insurance policies and to provide funding for our retirement. But no other life event can be as devastating to our lifestyle, finances and security as needing long term care. It drastically alters or completely eliminates the three principal retirement dreams of elderly Americans, which are:
1. Remaining independent in the home without intervention from others
2. Maintaining good health and receiving adequate health care
3. Having enough money for everyday needs and not outliving assets and income
Yet, it is our experience that the majority of the American public does not plan for the devastating crisis of needing eldercare. This lack of planning also has an adverse effect on the older person's family, with sacrifices made in time, money, family lifestyles and even affecting the family's or caregiver's medical and emotional health." National Care Planning Council "The 4 Steps of Long Term Care Planning".... read the entire article by going to http://www.planforcare.org.
-- Ellen S. Morris, JD
Labels: Florida Elder Law Attorney, long term care
The Internal Revenue Service has announced the 2009 limitations on the deductibility of long-term care insurance premiums from taxes. Any premium amounts above these limits are not considered to be a medical expense. (For details, click here.)
| Attained age before the close of the taxable year | Maximum deduction |
| 40 or less | $320 |
| More than 40 but not more than 50 | $600 |
| More than 50 but not more than 60 | $1,190 |
| More than 60 but not more than 70 | $3,180 |
| More than 70 | $3,980 |
Benefits from per diem or indemnity policies, which pay a predetermined amount each day, are not included in income except amounts that exceed the beneficiary's total qualified long-term care expenses or $280 per day (for 2009), whichever is greater.
For details from the American Association for Long-Term Care Insurance, click here. Of course, if you are planning for long-term care, you should always consult a Florida elder law attorney.
Labels: Florida Elder Law Attorney, long term care
A large majority of the American public still believes that the government will provide long term care when needed. It is this misconception that most likely prevents people from doing any planning at a younger age for the future need for care. According to the National Care Planning Council, many people believe they can give away assets prior to the need for long term care and qualify for Medicaid. The Council suggests that this belief prevents people from considering other ways to fund the cost of future care.
As a matter of fact, it may be possible to use the system and allow Medicaid to cover care but at what cost? Why would anyone want to plan to spend his remaining years in a nursing home--which is the preferred living arrangement for Medicaid. Why go through the expense and effort of trying to manipulate the system to get welfare care, when a little preplanning at an earlier age would be a better option?
In our Florida elder law attorney practice we hear frequent objection to long term care planning from people who think Medicare or the Veterans Benefits Administration will take care of them. While this is true to a certain extent, these people simply don't understand the limitations of these government programs.
Below are quotes taken from individuals who, over the years, have voiced misconceptions about long term care planning.
"Uncle Jim got along just fine with the government paying his care"
"I can give away my assets and have the government pay for it"
"We have a trust and all of our assets will go to our family so the government will pay for our care"
"I'm not interested in home care or assisted living, just stick me in a nursing home and Medicaid will pay the bill"
"Long term care insurance is too expensive"
Government could be more involved in providing care but our constipated system of delivery prevents this from happening. The National Aging Network, a government-sponsored program, is in the best position to help people receive long term care in their homes. And studies have shown that the cost of providing this kind of care is significantly less than the cost of providing nursing home care through government programs.
Unfortunately, for every dollar that supports a person through the Aging Network the government spends about $270 supporting a person in a nursing home. Because it has inadequate funding, the National Aging Network must confine its valuable services to people who have little income or for social reasons are disadvantaged. Moderate and middle income Americans can receive some services from the network but are mostly excluded from the more valuable caregiving services.
We believe the public's misunderstanding of Government long term care programs is an impediment to proper long term care planning. When people understand the limitations of relying on government programs they are most likely to be more motivated to plan for the future by making provisions in advance and providing advance funding to pay for care. Prior planning also allows people to have a choice in their care setting and in the type of services they receive.
--Ellen Morris, JD & Howard Krooks, JD CELA
Labels: elder care, long term care, medicaid
