According to the U.S. Department of Health and Human Services, someone turning age 65 today has a 70% chance of requiring long-term care (LTC) services and support at some point during the remainder of his or her life. Twenty percent of those who need LTC will need it for more than five years.
The statistics are clear; older Americans should be carrying a long-term care insurance policy to protect their future; unfortunately only about 7.2 million Americans age 65 years or older currently own a traditional long-term care policy, and this number has held steady for the last seven years. LTC insurance is expensive and finding the right plan for you in the myriad of insurance products available can be confusing and vary from state to state. According to A Place for Mom, there are seven myths about paying for long-term care:
MYTH #1: I have to get rid of all my assets to receive MaineCare.
In general, a person is not allowed to keep more than $2,000 in countable assets to be eligible for MaineCare. However, exempt assets in Maine include personal belongings, household furnishings, an automobile, irrevocable burial trusts, and one’s primary home. Although, subject to certain limitations, the value of one’s primary residence is exempt, the home is still subject to something called “estate recovery” and may be used to “pay back” the state after your death. Before making any attempt to spend down assets to qualify for MaineCare, please speak to an estate planning and elder law attorney; the complex five year “lookback” rules have penalties and exceptions that need to be carefully considered. However, with the assistance of an experienced estate planning and elder law attorney, you can preserve many of these assets for your surviving family members.
MYTH #2: Medicare will pay for my long-term care expenses.
No, Medicare will not pay for long-term care expenses except in the most specific and narrow of circumstances. Medicare can cover skilled in-home care from a nurse, occupational therapist, physical therapist, speech therapist or social worker for up to 21 days if ordered by a physician. With respect to a skilled nursing facility, Medicare pays for the first 20 days with no co-pays; if the stay is between 21 to 100 days, Medicare only pays a portion, and the beneficiary must pay the balance.
MYTH #3: I’m too young to need long-term care.
Many people think they are too young to worry about needing long-term care, let alone how to pay for it. The truth is that even under the age of 65, if the person has a chronic illness or traumatic accident, long-term in-home or residential care services may be needed. According to the US Department of Health and Human Services, about 8 % of people age 40 to 50 have a disability that may require long-term care services.
MYTH #4: My family will take care of me.
While many older Americans are successfully aging in place, in part due to the benefits of technology, unpaid family member caregivers, and community organizations, these resources are typically unwilling or unavailable for long-term, intensive caregiving. Serious and detailed discussions are essential if there is any possibility a family member is willing and able to take on a long-term caregiver role. While many family members are eager to provide oversight, the intensive requirements of long-term care are usually more than they are willing and able to provide for a long period of time.
MYTH #5: My health insurance will cover long-term care expenses.
Most health insurance policies will not cover long-term care expenses to any meaningful degree. Some plans do include minimal home care and skilled nursing benefits; however, the nature of the plan is generally short term and is intended to provide recovery and rehabilitation, whereas long-term care is generally custodial in nature for the safety, maintenance and well-being of a person with a chronic condition.
MYTH #6: My long-term care insurance will pay for all long-term care expenses.
Even most long-term care insurance policies will not cover all long-term care expenses. There are elimination periods which function as a deductible, as well as daily limits on the amount paid, and overall limits on the term of the policy.
MYTH 7: My savings will cover long-term care costs.
Finally, many Americans believe that their savings will cover the costs of their long-term care. The website A Place for Mom has a financial calculator to help individuals understand their specific needs to cover long-term care costs. Currently, the average US national median long-term health care cost is about $50,000 for a home health aide, which is above and beyond all other living costs. Maine is well above the national average at around $60,000 per year. With respect to residential care, Maine residents can see costs run into the hundreds of thousands of dollars in just a few short years. Unless a person is independently wealthy, most retirement savings will be spent down very quickly.
Chances are you will need long-term care at some point during your lifetime. It is important to be educated about which planning options are best suited to meet your personal, financial, and health needs. In addition, you should understand what legal options are available to help you in the event you need significant long-term care.
The team at Hodgkins Law has extensive experience with MaineCare and LTC planning, as well as incapacity planning. For more information, please visit our website or give us a call to attend a free educational seminar or schedule a consultation with our team.