We don’t sell long-term care insurance through our office, but we’ve seen the difference it can make for clients who have it in place when they come into to see us about long-term care issues. This article provides a good overview of the current state of long-term care insurance. I’m not going to rehash the contents of the article in this post, because I think the article does a great job of explaining things.
What I do think is important (because it relates to what we do) is to elaborate on one of the points made towards the end of the article. The idea of self-insurance — paying for care out of your own assets — is a prospect that many of our clients face. The article seems to indicate that the only option for folks with modest assets is to spend down to the point you or your loved one qualify for Medicaid.
What people need to understand is that completely wiping out your assets is NOT the only way to qualify for Medicaid, and I want to illustrate this with a few points:
- If you are married, and your spouse is needing care, there are basic spousal protections built into the Medicaid regulations that absolutely should be taken advantage of by the healthy spouse. In North Carolina, the healthy spouse (or community spouse, as they are called in the regulations), is allowed to keep one half of the couple’s assets, up to roughly $115,000. This amount does not include the home, life insurance with a face value of $10,000 or less, and one vehicle.
- If you are single or widowed, and you have significant cash assets, there are ways to plan using gifting and annuity combinations to protect at least some of those assets.
- If all you have is your home, don’t assume that you have no choice but to expose it to estate recovery. There are deeds that can be used to keep your home protected and leave something for your children.
There are a lot of other points related to crisis planning that I could spend thousands of words discussing here. But just remember, if you meet with a social worker and they tell you that you either don’t qualify because you have too many assets, or that what you do have will be subject to estate recovery after your death, that isn’t always the case. The social worker’s job is to give you the rules. Our job is to explain how the rules can still benefit you and your family.