Long-term care options that do not deplete your estate

On Behalf of | Apr 16, 2021 | Estate Planning

The traditional advice is to purchase long-term care insurance before you are 60 to keep it affordable. But there is a risk that you suffer an illness when you are younger and before making this investment. There are options, however, that help pay for long-term care without depleting your assets and overturning your estate planning.

Care is costly

The median cost of a semiprivate room at a skilled nursing facility is $93,075 a year. The median annual cost of a home health aide to assist with bathing, dressing, eating or other activities of daily living is $54,912.

Seeking insurance

Having a high risk of needing long-term care makes you less eligible for long-term care insurance. But it may not be disqualifying.

Seeking a policy after a cancer diagnosis, for example, is possible depending on it type and stage or if you remained cancer free for a certain time. Strokes that occurred two years ago are not disqualifying if there are no other medical conditions.

A denial from one long-term carrier can reduce the chances of being approved by others. But being truthful is important because carriers may deny future claims for dishonesty or failure to disclose medical conditions.

Health issues may be costly, however, if you can qualify for insurance. A 65-year-old man with some medical conditions pays an annual average premium of $2,100 compared to a healthy 65-year-old who is charged $1,400.

Other options

There are other options. You may fund long-term care by spending less and investing more in a 401(k), an IRA or a non-retirement account.

Many jobs offer long-term care plans regardless of health history. Employees may have the opportunity to continue these plans after they leave the job.

Another option is to invest in a long-term care annuity by paying a lump sum of money. In return, a certain amount of income is paid at set times for the remainder of your life. Special provisions also help pay for long-term care.

Hybrid policies allow people with chronic illnesses to purchase life insurance and obtain a long-term care rider. If you currently own a life insurance policy, you can do a long-term care settlement where the proceeds of the sale of the policy fund long-term care.

Medicaid pays for long-term care services for individuals with limited income. Countable assets are usually less than $2,000 for an individual and $3,000 for a couple.

Also, short-term care policies may be purchased that provide less generous benefits for up to a year.

Attorneys can help develop an estate plan that preserves your assets. They can also assist you with seeking aid for long-term care needs.