Your Parents and Long-Term Care Expenses

There can be a lot of considerations for those with senior parents.  One issue that many families face is how to help ensure that their loved one’s medical expenses are covered by their insurance and that their out-of-pocket costs can be paid.  For many, planning for these medical expenses may not necessarily include the costs associated with long-term care.  However, preparation for long-term care expenses should be part of preparing for your parents’ future.

What is Long-Term Care?

Long-term care refers to personal care services an individual requires when they have a condition which makes it difficult to manage their daily living tasks without help.  Those with cognitive impairment or dementia, a significant medical condition, a disability, or other conditions may require this kind of care.  The care provided may include care in the person’s home, in an assisted living facility, a nursing home, or adult day care center.

Medical Coverage for Long-Term Care

Those planning for their parents’ care may believe that Medicare will cover long-term care expense.  However, for these individuals, it will come as a surprise to learn that Medicare does not cover most long-term care.  This essentially leaves the recipient with three choices regarding paying for their care:

  • The first would be to pay out-of-pocket for their care. However, like most medical care, long-term care expense tends to be significant.  Consequently, it is not realistic for most people to plan for paying for this care themselves.
  • The next option is to qualify for Medicaid. While Medicaid does cover long-term care expenses, in order to qualify for Medicaid, the individual can not have a great deal in terms of assets. Further, the Medicaid program will review the person’s financial transactions over a five-year-period before they filed for Medicaid and can count certain transactions against the applicant.  The result could be that the applicant is disqualified from receiving Medicaid coverage for a certain amount of time.   Additionally, while there are steps which can be taken to protect assets, if you don’t plan properly some of the person’s estate will have to be used to repay Medicaid.
  • The third option would be to purchase long-term care insurance. Long-term care insurance provides insurance coverage for these expenses.  However, long-term care coverage will most likely not be available to someone once they need long-term care. These policies generally fall into two main categories. The first type is a traditional long-term care policy, where you pay premiums and have coverage based on those premiums.  The second type is a “hybrid” policy which operates where you use insurance or another investment vehicle which will convert to long-term care coverage should it become necessary.

Planning for long-term expenses is essential for individuals approaching the senior years.  The time to plan is before the need arises.  By being prepared for long-term care costs, you can help your loved ones protect their assets as well as be afforded choices in their medical care and coverage. Our office can provide estate planning and long-term care advice to help you navigate the decisions related to long-term coverage as well as your other estate planning needs.  Please contact us online or by phone if we may be of assistance.

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