If you are older and in need of care, you may be wondering if a long-term care insurance policy is right for you. A long-term care policy can cover services that your regular health insurance may not cover. Such a policy may cover the cost of care if you have a chronic medical condition, a disability, or simply because you are getting older, and the care may be covered whether it takes place in your own home, assisted living, or a skilled nursing facility. Unfortunately, you may not be able to purchase a long-term care insurance policy when you already need to use the services. Most people wanting to buy a policy need to do so by age 60 or 65 at the latest, and pay premiums for a while until they are in need. Are you in a situation where it is too late for you to buy long-term care insurance? You may have other options available to you.
1. Use “Living Benefits” on a Life Insurance Policy. A “living benefits” policy is typically available for whole life or universal life insurance and allows you to take a percentage of your future life insurance payout while you are still living to pay for medical expenses, which includes long-term care expenses. The future death benefit will be reduced by whatever amount you take to pay for long-term care expenses. You may need to ask your insurance company if there is a specific trigger that you need to have in order to access living benefits, for example, a diagnosis of a disability or terminal illness.
2. Use an Annuity. A type of annuity called an “immediate annuity” allows you to pay a one-time sum of money in exchange for an income stream for the remainder of your life. Anyone can buy an immediate annuity, even if you are already at a stage where your health is failing. You do need a large lump sum of cash to buy the annuity, usually at least $50,000. The money you receive each month can be used to pay for long-term care expenses.
3. Purchase a Short-Term Care Insurance Policy. Depending on your care needs, you can find a short-term care insurance policy that may cover your care expenses for anywhere from 3 to 12 months. If you have a specific diagnosis where you expect to incur a lot of expenses in a short period of time this may be a good alternative option, especially as there is no waiting period to use your coverage. There is usually an “elimination period” that functions like your health insurance deductible, and the period is the number of days you have to pay for your own care before the policy starts to cover it, typically 90 days.
4. Talk to a qualified elder law attorney about Medicaid planning. While early planning may be encouraged for long-term care costs, there may still be Medicaid planning strategies available, even if you have reached the point where you no longer qualify for long-term care insurance. A Medicaid planning attorney can help assess your options for how to qualify for Medicaid coverage without your assets being rapidly depleted by the cost of long-term care.
Do you need assistance exploring your options for how to cover the costs of long-term care? Please reach out to our office for assistance.