Long term care insurance

The average cost of nursing homes is $5,627 per month in 2017. In a study reported in the Journal of Geriatrics Society (Vol 58, Issue 9, Sep. 2010) on August 24, 2010, one out of every four people will die while residing in a nursing home. The length of stay data is summarized as follows:

-the median length of stay in a nursing home before death was 5 months 

-65% died within 1 year of nursing home admission 

-53% died within 6 months of nursing home admission 

Medicare and Medicare supplements do not cover long-term care. Medicaid does provide for long term care, but to qualify, an unmarried individual has to have less than $2,000 of assets and monthly income of less than $2,208 (although an individual can have up to $6,584 of income by using a “Miller Trust”). Married couples have a little more flexibility in that they can keep $129,100 provided that one of the spouses continues to live at home. 

 A lot of people with a lot of assets, such as farmland, inquire about qualifying for Medicaid for nursing home costs so that their children can inherit the farmland. This is a bad idea. Medicaid has a five-year look back for any transfers of assets without adequate value. During this five-year period when mom and dad are self-impoverished, they will have to rely upon the charity of others, perhaps their children, for their livelihood. The psychology is not good here. Further, Medicaid only pays for a double-room occupancy; so if you were lucky enough to outlast the five-year lookback period, your reward is to spend the remainder of your life in a room with another patient as a roommate. If the kids are really interested in keeping the farmland as their inheritance, they should plan on keeping that spare bedroom in their house available for you.

Obviously, long term care insurance can mitigate this liability exposure. The policies have varied coverage and can apply to assisted living or intermediate care as well as skilled nursing. Long-term care insurance policies generally have a benefit period or lifetime benefit maximum, which is the total amount of time or total amount of dollars up to which benefits will be paid. Common benefit periods for long-term care policies are two, three, four, and five years, and lifetime or unlimited coverage. Other options between five years and lifetime/unlimited coverage are also available from many companies. Most policies translate these time periods into dollar amounts and do not actually limit the number of days for which they will pay for care – just the overall dollar amount that the policy will pay.  

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.