THE LAW OFFICE OF
PAUL MITCHELL
A Limited Liability Company
| Paul Mitchell |
| 3300 South Parker Road, Suite 215 |
Does Long Term Care Insurance Pay Off?
I am frequently asked by my clients if I recommend long term care insurance. In response, I tell them “yes”. Having a policy allows greater freedom to the patient to choose the amount and type of care without having to deal with a governmental application.
Current policies will cover at-home care, assisted living and nursing home care. This is the full continuum of care.
Services are usually only available if a person cannot perform two of six activities of daily living (ADL’s) without assistance. These include dressing, bathing, eating, toileting, continence and transferring . An insured would have to have significant impairment to meet this test. If a person has a significant cognitive impairment that requires substantial supervision, then they do not need to meet the test for ADL’s. As you can imagine, few people in assisted living could meet these criteria while everyone in a nursing home would meet the criteria.
Long term care insurance can be very useful for Medicaid planning. For instance, by purchasing a policy that, together with the insured’s income, could cover the cost of care, an insured could, with advice from a Medicaid attorney, give property away. During the following five years the insured will have provided for their own support. Five years after the gift, Medicaid would no longer penalize the person for the gift. Then, the person could apply for Medicaid. So, a policy can be used to enhance a legacy to children.
A policy may also be used for a support plan for crisis Medicaid planning. When the insured is irrevocably committed to residence in a nursing home, then he or she can make a limited gift of his or her assets. Hypothetically, a person with limited income may be able to gift half of his or her assets to his or her children and use the other half for his or her support using a Medicaid annuity to provide extra monthly income. If the person were insured, then little or no funds would be needed for support. Consequently, the patient could give much more to his or her children.
New long term care insurance policies can have a fantastic benefit! In partnership with the State, the State will not count the assets equal to the amount paid by a policy. For instance, the policy pays out $180,000 over a five-year period.
A single insured may normally keep only $2,000. With the qualifying policy, the insured may keep $182,000! When considering policies, you should be sure to check into this option.
