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Friday, May 13, 2016

Legacy Assurance Plan Article | Include Long-Term Care Planning in Your Estate Planning Considerations

Summary: One aspect of estate planning that too many people overlook is long-term care planning. With people living longer than ever, the chance of needing long term is higher than ever, so you need to have a plan in place. These plans can include many techniques for achieving your goals, such as buying, selling or restructuring assets in order to increase your ability to qualify for Medicaid, or protecting yourself through the purchase of long-term care insurance. 

People today are living longer than ever. According to current federal government statistics, if you live to be 65, you can expect to survive to see your 84th birthday if you're a man, 86 if you are a woman. A tenth of those 65-years-olds will make it to age 95. Given these longer life spans, the likelihood of experiencing a stay in a long-term care setting is also higher than ever. The US Department of Health says that 70% those age 65 or older will require some type of long-term care with more than half of those needing nursing home care. And that long-term comes with a substantial cost. A stay in a nursing home can run anywhere from $50,000 to $150,000 per year, depending on where you live. Nationally, that average works out to more than $200 per day for a semi-private room or $230 for a private one.

Medicaid is one source that may pay for your long-term care. However, in order to qualify for Medicaid, you must first spend almost all of your assets and have an income low enough that you meet the government's standards for financial neediness. This may dramatically derail the plans you have for leaving an inheritance to your children or grandchildren, as well as placing a hardship on your spouse if she is still living at home. 

The good news is that the federal government's Medicaid qualification rules exempt some assets from counting against you when you apply for Medicaid. For instance, if you purchase a car that your family uses for your medical needs (for example, traveling to the doctor's office,) then that car may not count against when you apply for Medicaid. Certain other assets, such as your home, retirement funds, prepaid final arrangement plans and some financial instruments (like some annuities) may also be exempt, meaning that you do not have to sell them in order to qualify. A qualified attorney can help you craft a plan that will help increase your chance of becoming eligible for Medicaid without completely impoverishing your family.  

Another option than may assist certain families is long-term care insurance. It is very important, however, to weight the costs and benefits of this insurance (like any purchase) in light of your situation. You should make certain that the policy you buy provides enough benefits to meet your needs, while still coming with a premium that you can afford. An inflation rider is in many cases also an extremely helpful component of a long-term care policy. 

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