Long-Term Care Planning

Long-Term Care Planning

The high cost of long-term care has made planning a critically important issue for most seniors and their families.  This is an issue that affects nearly everyone, regardless of net worth.  In fact, about 2/3 of the population over age 65 will likely require some form of long-term care.  Sadly, many of them are unprepared for the significant financial burden it places on their family’s hard-earned savings.  Financial devastation looms large for a family facing ongoing care at a rate of about $7,000 or more per month.

Many people assume that their retirement savings will be sufficient to pay for their long-term care needs.  Unfortunately, this “self-insurance” approach will not work for most people.  As our life expectancy increases, so does our risk of health issues.  The average length of long-term care has also shown a steady increase, especially as more people contract dementia-related illness, such as Alzheimer’s and Parkinson’s. The sad truth is that the rising cost and length of long-term care threatens to wipe out the life savings of our aging population. 

Pre-Planning vs. Crisis Planning
The rule of thumb is simple: the earlier you plan, the better your plan will be...but it is never too late to create a plan.  Proactively making your plan before you face a need for long-term care can help you to protect more (or even all) of your hard-earned assets, so you can enjoy them in your retirement and leave a legacy for your loved ones.  Pre-planning also opens you up to more options regarding the insurance products available to supplement your long-term care plan – which is the best way to create a comprehensive, fool proof plan.

Planning in a crisis (when a long-term care need is imminent or already happening) limits your planning options, but it does not completely eliminate your ability to create a plan.  Diminished health and increased age make it harder and more expensive to obtain long-term care insurance (“LTCI”) to supplement your plan.  In creating all long-term care plans, we use the Medicaid rules as our framework – not so we can help everyone qualify for Medicaid, but so we don’t inadvertently create a plan that disqualifies them for Medicaid.  The Medicaid rules are very strict regarding the types of planning tools you can use and when you can use them, so planning options are limited when you already need the care, because you can’t afford to wait out the Medicaid limits.  Regardless of the limitations, there is still good planning that can be done in crisis situations.  So, even if you think it’s “too late,” you should always contact an elder planning professional to evaluate your planning options.

Long-Term Care Insurance
Those people who have planned ahead by purchasing long-term care insurance have an added degree of peace of mind, knowing that they have a lesser need to rely on other sources of funding for long-term care in the future. We are proponents of LTCI and we regularly encourage clients to explore this valuable option, though we do not sell it. Unfortunately, many can’t afford the high cost of traditional LTCI or, they cannot qualify for it because of age or medical condition.  If you do have LTCI, you should be aware of exactly what your policy covers.  Many policies have high deductibles, long elimination periods or provide for only a short period of care in facility. In fact, many who have LTCI still have to resort to Medicaid to pay for their care after their insurance policy runs dry (though there could be additional savings available through Ohio's Partnership Program).  There are many types of LTCI out there, both premium-based and asset-based, so it is important to work with an insurance professional who is qualified and knowledgeable about all of your options – and revisit your insurance plan often!

The best way to plan for long-term care is to combine a legal plan and an insurance plan.  Using this technique, you may be able to get by with a LTCI policy that covers a shorter period of time, because your legal plan will help you qualify for other funding if your LTCI policy runs out.  Your legal plan serves as a comprehensive estate plan that will provide for the management of your assets during your life, during any period of incompetency and after your death, but it will also protect you from having to “spend down” all of your savings in order to qualify for government assistance.  Incorporating LTCI into your legal plan provides an added layer of protection against the need to spend anything down.  People of any net worth can benefit from this type of planning, especially when done well in advance.
Medicaid Eligibility
Medicaid is another other option available to help pay for care.  A joint federal-state program, Medicaid provides need-based assistance to low-income individuals, including those who are over age 65, disabled or blind.  Medicaid is the single largest payer of nursing home bills in America, and serves as the option of last resort for people who have no other way to finance their long-term care. Medicaid eligibility rules vary drastically from state to state, although all states must observe at least the minimum standards and guidelines set by the federal government.  Ohio is traditionally one of the most aggressive Medicaid states.
While Medicaid eligibility for long-term care was not too difficult in the past, there has been a steady drift toward more complex and restrictive rules, the latest being the Deficit Reduction Act of 2005 which went into effect in 2006, and Ohio's switch to a "1634" (Social Security) state in 2016.  These changes resulted in complex eligibility requirements for those in need of Medicaid benefits.  It’s no longer as easy as simply reviewing bank statements.  There are a myriad of regulations involving look-back periods, income caps, transfer penalties and waiting periods that need to factor into your Medicaid plan.  This is why it is crucial to seek the assistance of a qualified elder law attorney before applying for Medicaid.
Our law firm has the experience and the expertise to help avoid the financial ruin associated with the high cost of long-term care.  Contact us today to start the process of understanding the issues surrounding Medicaid eligibility.  We’ll walk you through every step of the process, from reviewing your finances through the look-back period, to developing a spend-down plan and even attending the Medicaid application interview for you.  When it comes to Medicaid, it’s never too early – or too late – to plan.

The attorneys of O’Diam & Estess Law Group, Inc., assist individuals, families and business owners throughout the Miami Valley, including Dayton, Kettering, Oakwood, Centerville, Beavercreek, Xenia, Springfield, Springboro and Troy, in Greene County, Montgomery County, Clark County, Warren County and Miami County.

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| Phone: 937-458-0574

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