Estate Planning and Long Term Health Care Insurance

 

Chances are at some time you will be looking for suitable nursing home for someone in your family. Nursing home costs can be staggering and can potentially cripple a family financially. There are ways you can prepare to help ease this financial burden and ideally this preparation should occur well in advance of needing the services of a nursing home. One option is:

 

A Private Health Insurance Plan

 

This policy may cover several care arrangements, including:

 

  • Assisted Living
  • Day care services for adults
  • Home Care
  • Modifications to the existing home that allows the resident to still perform basic services themselves such as bathing by installing grab bars
  • Future Services — this is an option added to the policy to allow for future long-term care options that currently do not exist.
  • Nursing Homes

 

Things to consider when choosing a Long Term Health Care Insurance Policy:

 

  • Current age and health: The younger and healthier you are when you purchase a policy, the better your rates will be. If you have a serious pre-existing condition, you may be unable to get coverage.
  • Cost of Premiums: Are you financially able to handle the cost of the premiums? Premiums will rise over time and if your future income is uncertain, paying these premiums may become a burden to you financially. If at some point you find you cannot afford to pay the premiums, all the money you have invested in the policy is gone.
  • Talk to you financial advisor — or an attorney with experience in estate law — to help you establish a plan for saving for any long-term care expenses. Your estate planner can go over the positives and negatives of purchasing a long-term healthcare insurance policy.
  • Tax implications — benefits distributed through a long-term healthcare policy are usually not taxed as income. In addition, if you itemize deductions on your tax returns, the premiums paid to this policy qualify as medical costs. If these costs are above 7.5 percent of your adjusted gross income, the premiums can be deducted from your federal taxes. Please note that the amount of the deduction is age dependent. Consult your tax preparer or financial advisor for specifics.

 

Where to purchase long-term care insurance policies

 

  • Purchase an individual policy through an insurance agent or broker. Do your research to be sure the agent has had specialized training in long-term insurance and that they are indeed licensed to sell insurance.
  • Some employers offer group plans or the opportunity to purchase individual plans at a discounted group rate. You may also be able to purchase policies for family members. Confirm with your employer that if you leave their employment, you are able to keep the policy you have or at least receive a comparable policy if you pay the premiums.
  • You may be a member of a professional or service organization that offers long-term care policies at group rates. Just make sure you understand the implications of the policy should you discontinue membership.
  • Policies purchased through State Partnership Programs lets you keep a certain amount of assets and still qualify for Medicaid. Ask your insurance agent whether the policy you are thinking of purchasing works with Medicaid and the State Partnership Program and the particulars around qualifying for Medicaid.

 

It is important that you are as financially prepared as possible if the time comes where you need to choose a long-term care option for yourself or a loved one.  With the help of attorneys assisting you with your estate planning, you can be assured your needs will addressed by professional and experienced estate planners. An estate planning lawyer Sacramento CA residents recommend can help you with any questions.


 

Thanks to our friends and contributors from Yee Law Group for their insight into Estate Planning.