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Horizon Elder Law & Estate Planning Blog

Tuesday, September 28, 2021

Is Long-Term Care Insurance a Good Purchase?

Long-term care can cost a fortune, quickly burning up the savings and assets you work hard to earn throughout your lifetime. One way to get help with this expense is to buy long-term care insurance. These policies are expensive, so you might be wondering, Is long-term care insurance a good purchase?

The short answer is that it depends. There are options that could work better for you. A California elder law attorney can structure your estate plan to address nursing home costs and create legal documents like Medicaid trusts that can help you qualify for Medicaid to pay some or all of your long-term care costs.

Some Problems with Long-Term Care Insurance

There have been multiple long-term care insurance scandals during recent decades. Some companies went out of business, leaving no coverage or benefits for their customers who had faithfully paid hundreds of dollars in premiums every month for years.

Tucked into the “fine print” of some policies are so many exclusions and limitations that the policies are, in reality, practically worthless. You might be limited to specific facilities even though you no longer live near them. You might end up needing home health care, but your insurance policy might require you to move into a nursing home to receive any benefits.

Some policies pay very little in benefits, leaving the senior to pay the remaining bill, which can easily be $8,000 to $10,000 a month or more. One could do better to stick the amount of the monthly premiums into a savings account because at least they would still have that money to help pay their nursing home bills.

A long-term care insurance company might lure you in by offering reasonable monthly premiums. After you invest thousands of dollars in premiums, they start raising the premiums so much that you struggle to maintain the policy.

You will have to choose between walking away from all the money you already paid for coverage and struggling to make ends meet while paying much more than you expected for insurance you might never need to use. The older you get, the more premium increases the insurance company could assess.

Things to Consider About Buying Long-Term Care Insurance

You have no reliable or accurate way to predict whether you will need long-term care at all, much less the amount of coverage and type. If you buy a policy that only pays for home health care, for example, it will be worthless if you eventually need to live in a nursing home.

Some people shrug their shoulders and say that Medicaid will pay for long-term care after they spend their life savings down to the point of qualifying for this assistance. Things are seldom that simple.

If you need nursing home care but your spouse does not, your nursing home bills could leave your spouse destitute before you qualify for Medicaid. Also, if you made certain gifts to loved ones before applying for Medicaid, that generosity could affect your eligibility for Medicaid benefits.

Getting a Medicaid trust could allow your spouse to continue living in the community while you receive help with long-term care costs from Medicaid. Also, some people decide to self-insure, setting aside the amount of money that a typical stay in a nursing home could cost. Most people do not stay in nursing homes for many years, contrary to popular opinion.

If you decide to buy long-term-care coverage, you might want to look for a policy that is flexible about things like home health care and residential care, lets you use the monthly benefit amount as you see fit, and retains the unused portion for your future use, covers the average length of stay, and puts limits on the number of premium increases.

A California elder law attorney can help you evaluate your options about paying for possible long-term care. Call our office today to set up a consultation.


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