Long Term Care Planning

Serving Families and Individuals throughout Overland Park, Leawood and the Surrounding Areas


Are you looking for information regarding how you can qualify to have Medicaid pay for your nursing home stay?

Then this article is not for you.

I am neither an “elder law attorney,” nor do I provide Medicaid planning advice.

Accordingly, anything in this article regarding Medicaid (and other government programs) is just general information only and certainly not to be regarded as legal advice.

My recommendation would be to find an “elder law attorney” near you. He or she can counsel you regarding the assets you can keep and the ones you must “spend down” to the become eligible for Medicaid. In addition, an elder law attorney can help you prepare and file the Medicaid application with the appropriate government agency.

You can find a state-by-state directory of elder law attorneys at www.naela.org, the official website of the National Academy of Elder Law Attorneys.

The Brutal Realities

If you are reading on, then I presume you are more interested in “paying your own way” (if at all possible) should you ever need long-term care. I applaud you for pursuing this path of personal responsibility.

But first, let’s dispel some common misconceptions.

Forget about Medicare paying for your chronic long-term care needs. Medicare only pays for acute nursing home care for up to 100 days, and even then your eligibility and the payments are subject to very strict requirements. Remember, too, Medigap (i.e., Medicare supplemental policies) will not pay for your chronic long-term care needs either.

What about giving away your assets to your loved ones to qualify for Medicaid?

Legally speaking, any transfer of assets for less than fair market value may render you ineligible for Medicaid assistance for 60 months or more under the complex and confusing web of Medicaid Regulations.

Practically speaking, once you are rendered ineligible following the transfer of your assets for less than fair market value, what happens if your loved ones subsequently lose such assets through squandering, divorces, lawsuits and bankruptcies?

Long-Term Scare: The Good News and Bad News

The good news is this: the longer you live, the longer you live. Surely you have read the statistics regarding how modern life has extended the average life expectancy with each generation.

Now, the bad news. With each birthday, you may lose the ability to maintain your personal autonomy physically, mentally or both. Due to an injury or illness you may lose the ability to perform one or more "activities of daily living” (ADLs) like bathing, dressing, eating, toileting or transferring (e.g., getting in and out of bed). However, before losing ADLs, you may lose the ability to perform “instrumentalities of daily living” (IADLs). These include routine household chores, meal preparation or managing your finances.

Mentally, beyond everyday forgetfulness, dementia and Alzheimer’s can steal your ability to recognize loved ones and dear friends alike. Whoever said “growing old is not for sissies” was spot on.

Long-Term Scare: The Numbers

After age 65 some 70 percent of Americans over age 65 will require long-term care assistance, but many have absolutely no idea how to pay for it. And expensive it is. According to the latest figures on www.longtermcare.gov, the “average” monthly cost of a “semi-private” room in a skilled nursing facility is $6,235, and $3,293 for a one-room unit in an assisted living facility.

According to commonly cited statistics, 50 percent of senior couples are impoverished within a year after either spouse enters a nursing home. [Oftentimes, the other spouse is not too far behind after wearing out while keeping the other out of an institution for as long as possible.] The number impoverished after one year jumps to 70 percent for single senior.

In my anecdotal experience, although 70 percent of those age 65 and older will need long-term care, 70 percent of them think it will happen to someone else and 70 percent think someone else (e.g., the “government”) will pay for it.

That is just human nature, isn’t it? In this case, “denial” is not a river in Egypt. [Bad, I know, but I could resist dragging out that old chestnut.]

Long-Term Care: My Solution

Disclosure: Gretchen and I obtained our own long-term care insurance policies when we were both age 49.

Why?

If Gretchen or I need assistance with ADLs or IADLs, then we want to hire a professional to take care of us instead of our daughters.

No one, it seems, relishes the idea of paying insurance premiums of any kind. Maybe that includes you. I know Gretchen and I do not enjoy cutting those checks to the insurance company. After all, you can pay and pay and pay … and never collect.

If you are fortunate, that is.

The purpose of insurance is to transfer a risk that you can afford (i.e., the payment of a premium with no guarantee of its return) to cover a risk you cannot afford. For example, what homeowner does not insure their personal residence from damage due to fire? Or, what automobile owner does not insure their auto from damage due to a collision? Consider this: The odds of a major fire insurance claim are 1 in 88, with an average claim of $2,000. And, the odds of an auto insurance collision claim are 1 in 47, with an average claim of $8,000.

Against this backdrop, why would any responsible Americans not insure against the financial risk of requiring long-term care at some point given “the numbers” I cited above? It doesn’t take too many months “on claim” to recoup the investment of your premium payments.

LTCi Alternatives

Fortunately, an appropriate Long-Term Care Insurance (LTCi) policy can be designed to fit almost any budget. Some are even life insurance policies with a special LTCi “rider” that pays a death benefit to your loved ones, if you do not need the policy to pay for long-term care.

Most LTCI policies share some common features you should know, to include the following:

Benefit Amount: How much and how long will the policy pay?
Benefit Triggers: When will the policy pay benefits?
Inflation Protection: Will the purchasing power of the benefit amount increase?
Level of Care: Are “custodial care” and “intermediate care” covered, along with “skilled nursing care”? What about home health care covered?

Caveat Emptor!

That is Latin for Let the Buyer Beware. When shopping for an appropriate life insurance policy, remember that financial strength is a key consideration. As with any form of insurance, the policy is only as good as the ability of the insurance company to pay your claim.

Check out the financial strength and reputation of the insurance company before you sign on the dotted line.

When it comes to verifying financial strength, there are several established insurer rating services, such as A.M. Best Company (www.ambest.com), Fitch, Inc. (www.fitchratings.com), Moody’s Investor Service, Inc. (www.moodys.com), Standard & Poor’s Insurance Rating Services (www.standardandpoors.com), and Weiss Research, Inc. (www.weissratings.com).

Reputation also is important. Contact the Insurance Commissioner for your state regarding an insurance company’s status and any complaints from policyholders.

Finally, contact the National Association of Insurance Commissioners for a free copy of the Life Insurance Buyer’s Guide, and other valuable resources, by phone (816) 842-3600 or online at www.naic.org.

Closing Thoughts

This has been a brief overview of an extremely complex subject. The scope of the insurance options available for your long-term care protection extends well beyond this brief overview. When you are ready for help with your long-term care planning through appropriate insurance for your objective, then we can help you find that, as well.

There are three ways to schedule your consultation: first, give us a call, second, send us an email or third, Request a Consultation online. It is that easy. Really.

The Law Office of

Kyle E. Krull, P.A.


Phone: 913-851-4880

5209 W. 164th Street
Overland Park, KS 66085

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Fax: 913-851-4890

Email: consult@kylekrull.com

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