Long Term Care Insurance by Phil Runyon

Long Term Care Insurance

Attorneys who do estate planning are often asked how to structure their clients' affairs so their assets aren't all taken to pay nursing home expenses.  Many of them have been told to turn over all their property to their children, so it will appear they don't have sufficient assets to pay for nursing home care and they'll qualify for Medicaid, the program that subsidizes those expenses for people in need.

The problem with that course of action is that it jeopardizes the parents' financial security much more than the threat of nursing home expenses.  If children become the owners of their parents' assets, the parents no longer have any control over providing for their future needs, and their assets are exposed to all the financial challenges facing their children.  If their children divorce or get sued or go bankrupt, or if their children simply need the assets to pay their own expenses, the assets the parents were trying so hard to protect will be at risk to a much greater extent than being needed for long-term nursing home care.

The more rational way to protect against devastating nursing home expenses is long-term care insurance.  Permit me a personal testimonial.  My parents purchased such a policy years ago, without any recommendation from me, I must confess.  It covered not only care in a nursing home, but also the expense of having caregivers in their home, where they've been able to stay for years longer than if the only recourse for benefits was to move to a nursing home.  Although the premiums weren't insignificant, the obligation to pay those premiums ceased once they started receiving benefits, and my parents quickly recouped all the premiums they'd paid.  At this point, they've received infinitely more than they ever paid out - and they've kept control of their own assets in the meantime.

So, here's what I suggest.  Rather than trying to impoverish yourselves by risky transfers of assets, or worrying that you can't afford any more expensive insurance, decide just how much you could/would pay to put your mind at ease about this issue.  Then consult a long-term care insurance specialist for a no-strings-attached estimate.  The companies that issue these policies - and most are huge reputable carriers whose names you know - offer a cafeteria of benefits to choose from, which an independent agent can help you navigate to build a policy that meets your basic needs without exceeding your budget.  As you can imagine, the key variables will be the amount of the daily or monthly benefit (even $100 per day will help significantly), the number of years the benefits will continue (3 years is the average nursing home stay), and whether home care is covered as well as care in a nursing home (very important to include!).

If you'd like to pursue this option and need a referral to a qualified agent who won't try to twist your arms, please let me know and I will be happy to provide several names.  I'm not in this business myself, but there will be plenty of satisfaction knowing that clients haven't resorted to other potentially dangerous tactics.

(Posted March 16, 2012)