Brooklyn Long-Term Care Planning Attorney nursing home bed with green sheets  in NY

Even if you’ve been financially responsible your entire life, the high cost of long-term care can throw your family into a crisis situation. Statistics show the average cost of a nursing home in New York is over $100,000 per year—an expense that isn’t covered by Medicaid or private health insurance.

Evaluating Your Existing Resources

The first part of the long-term care planning process involves looking at your existing resources and savings strategy. Paying for long-term care out of pocket is known as self-insuring.

If you’re interested in this option, you must consider your monthly income needs, the level at which the cost of long-term care is expected to increase, and how long-term care costs would affect the legacy you wish to leave for your children or grandchildren. If you’re married, you need to prepare for the possibility of both you and your spouse needing care as well as how you’d handle the expenses of one spouse continuing to remain at home. When all of these variables are taken into account, self-insuring may end up being a less than ideal option.

Long-Term Care Insurance Eases Your Financial Burden

In most cases, people should think about purchasing long-term care insurance between the ages of 45 and 55. If you wait until you are over 60 to purchase long-term care insurance, you are more likely to have medical conditions that make it harder to qualify for discounts or to get approved for coverage at all.

Traditional long-term care insurance only pays for the cost of long-term care, which means you won’t benefit if your health allows you to continue living at home. Hybrid policies include both life insurance and long-term care insurance. If you die before you’ve used the long-term care portion, your heirs will receive a death benefit.

If you’re married, some long-term care insurance policies offer an option to create a shared pool of benefits that either spouse can use. For example, you may have two policies providing a pool of six years of coverage instead of offering only three years per person. However, the shared benefit pool can increase premiums by 10% to 20% over the cost of separate policies.

Pay close attention to the waiting period for coverage as you’re evaluating different policies. Ideally, you want a policy with a calendar-day waiting period as opposed to a days-of-service waiting period. If you end up needing care in your home two to three days per week, as opposed to requiring 24/7 care in a nursing home, a policy with a days-of-service waiting period will leave you paying out of pocket for several months longer than a policy with a calendar-day waiting period.

Costs for long-term care insurance will vary depending upon your age, health, and the level of coverage you desire. If keeping premiums low is an important consideration, policies that provide limited benefits may be an option to bridge the gap between what you can afford to pay from your existing assets and the actual cost of a nursing home in your area.

Regardless of which type of policy you choose to purchase, inflation protection is essential. However, since this benefit is not automatically included, it’s important to read the fine print before you start paying premiums.

Accessing Medicaid Benefits Requires Careful Planning

Although Medicare doesn’t cover the cost of long-term care, Medicaid will provide coverage for seniors who qualify. However, this program has strict income and asset limits as well as a five-year lookback period where all financial transactions are subject to review to make sure applicants aren’t gifting assets or selling them for below-market value in an attempt to qualify for benefits.

Working with an experienced attorney can help you determine which planning strategies will protect your assets while qualifying for Medicaid. Depending on your situation, this might include spending down assets to make improvements that will allow you to remain at home longer, converting countable assets into exempt assets, or establishing a Medicaid Asset Protection Trust (MAPT).

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Ted Alatsas
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Trusted Brooklyn, New York Family Law Attorney helping NY residents with Elder Law and Asset Protection