When you think about estate planning, you probably don’t think about long-term care expenses. You likely just focus on the provisions of your Last Will and Testament that determine how your estate will be distributed when you are gone. Estate planning, however, if it’s comprehensive, should deal with how to pay for potential long-term care expenses.
One of the most important goals of your estate plan should be to protect both you and your assets during your lifetime. To do that, you need to consider the very real possibility that you will need long-term care (LTC) at some point in your life and how you will pay for the prohibitive cost of that care.
One option is to purchase long-term care insurance. In the State of Georgia, the Georgia Long Term Care Partnership provides a long-term care insurance option that also takes into account the potential need for Medicaid eligibility down the road.
Will You Need Long-Term Care?
We may all hope to avoid spending time in a Long-Term Care facility when we are older; however, given the odds of needing LTC, it is best to plan for the possibility. When you enter your retirement years, around age 65, you stand about a 50 percent chance of one day needing long-term care.
If you are alive at age 85, those odds increase to a 75 percent chance of ending up in a nursing home or other long-term care facility prior to your death. Consequently, it is in your best interest to consider the possibility that you will face the need to pay for long-term care at some time down the road.
The Cost of Long-Term Care
The average person is unaware of just how expensive long-term care can be. Nationwide, the average cost of a year stay in a long-term care facility was $80,000 in 2016. The average cost of care in Georgia at $72,000 per year, and an average stay of 3 years would cost a resident over $216,000. Medicare won’t pay for long-term care costs except under very limited circumstances and even then, not for more than 100 days. Basic health insurance policies also typically exclude LTC expenses.
For the average person, this leaves Medicaid or long-term care insurance as the only viable options for help covering long-term care expenses.
Can Medicaid Help?
Medicaid does cover long-term care expenses, but you must first qualify for Medicaid benefits. For many seniors who failed to incorporate Medicaid planning into their estate plan, qualifying for Medicaid present its own problems. Eligibility for Medicaid is determined, in large part, on an applicant’s income and “countable resources.”
The countable resources (assets) limit is usually very low ($2,000 for a single person), making it difficult for applicants to qualify without having to “spend-down” their assets first. The Medicaid “spend-down” rule effectively means that you could be required to sell your retirement nest egg in order to get the value of your assets low enough to qualify.
Long-Term Care Insurance: Is It Worth It?
One way to plan for the impact of long-term care expenses is to purchase long-term care insurance. Conceptually, LTC insurance works the same way as other types of insurance. As the insured, you will be covered in the event that you require LTC. There are, however, a number of factors you need to consider when deciding on a long-term care policy because they impact the amount of coverage you have and when that coverage will be available.
Georgia has a unique program that integrates LTC insurance into Medicaid eligibility. According to the Georgia Department of Community Health, the program works as follows:
“For every dollar that a Partnership policy pays out in benefits, a dollar of assets can be protected (disregarded) from the long-term care Medicaid asset limit. The protected assets will also be exempted from Estate Recovery in amount equal to the benefits paid by the Partnership policy.”
In effect, this means that the money you spend on a long-term care policy will not only provide you with insurance that covers LTC expenses, but it may also result in protecting your assets if you ultimately need to qualify for Medicaid benefits. To find out if purchasing long-term care insurance is in your best interest, consult with your Georgia estate planning attorney.
If you have additional questions or concerns regarding long-term care insurance, contact the experienced Georgia estate planning attorneys at Fouts Law Group, LLC by calling (678) 242-8344 to schedule an appointment.
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