CA Estate Planning Blog

Monday, November 12, 2012

How to Pay for Long Term Care

As a senior approaches the twilight of their lives, the issue of paying for long term care becomes ever looming. Unfortunately the odds are fairly high that most seniors will end up in some form of assisted or skilled care. The high cost of long-term care has made planning a critically important issue for most middle class seniors and their families. Sadly, many of them are unprepared for the significant financial burdens it places on their family’s hard earned savings.  Financial devastation looms large for a family facing ongoing care at a rate of $10,000 or more per month.
 
While some seniors are able to afford private pay care, the cost of long-term care will wipe out savings of all but the wealthiest families in a matter of years.  Those who have planned ahead by purchasing long-term care insurance have a degree of certainty and peace of mind, knowing that they have a lesser need to rely on other sources in the future.  Unfortunately, many can’t afford the high cost of long term care insurance or worse, because of age of medical condition cannot qualify for long term care insurance altogether.  If you do have long-term care insurance, you should be aware of what your policy covers.  Many policies have high deductibles or provide for only a short period of care in facility.  In fact, many who have long-term care insurance still have to resort to Medicaid to pay for their care.

Medicare is available to help at the onset of any medical issues but only cover long term care issues for a few months.  After which your options to pay for in home, assisted or skilled (nursing home) care are

  • Self Insurance:  Using your life savings to pay for skilled care which typically costs around $7,000 per month.  However, cash clients will have the most options available to them when it comes to choosing a care facility.
  • Long Term Care Insurance:  If you were fortunate enough to be able to afford this insurance when you were 50 or 60, such insurance can go a long way to providing the senior the funds they need to pa for long term care.
  • VA Aid and Attendance Pension Benefit:  If you or your spouse were a veteran who served during a war era (ie WW II, Korea, Vietnam etc), you can qualify for long term care benefits of up to $2,000 per month tax free.  Financially qualifying for this benefit is fairly straightforwrd but may involve shifting some of your assets to an irrevocable trust.
  • Medi-Cal/Medicaid:  The safety net available to financially qualified individuals.  Medi-Cal/Medicaid is a joint federal-state program.  Medicaid provides medical assistance to low-income individuals, including those who are 65 or older, disabled or blind.  Medicaid is the single largest payer of nursing home bills in America and serves as the option of last resort for people who have no other way to finance their long-term care.
 

 


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