Medicaid Planning with Long Term Care Insurance
Long term care insurance became a popular commodity in the 1980s as individuals sought to plan for potentially needing long term care services, such as home health care, assisted living facility care or skilled nursing facility care. Given the enormous cost of long term care services, along with Medicare’s lack of coverage for these non-acute medical services, many individuals invest in a long term care insurance plan. As average life expectancy and long term care costs in the United States have increased over the last 25 years, there has been an accompanying increase in long term care insurance premiums. Despite this increased cost, long term care insurance policies usually have a cap on the number of years it will provide coverage and/or a cap on the amount of money the policy will pay. To account for the shortcomings of long term care insurance, it may be wise for individuals to consider Medicaid planning for long term care services.
While individuals covered by long term care insurance may think that Medicaid planning for long term care is unnecessarily duplicative, it is important to consider that long term care insurance typically expires at a certain point, which can leave an individual’s assets exposed to the costs of long term care. Unlike long term care insurance, Medicaid coverage for long term care services, once acquired, will last for an individual’s entire life, assuming the individual maintains compliance with Medicaid’s asset cap and income cap. Long term care insurance companies also carry a risk of bankruptcy, which is a risk that is almost non-existent when it comes to Medicaid.
Aside from the policy benefits, long term care insurance coverage can assist individuals who wish to perform Medicaid planning. While most individuals usually want to avoid Medicaid’s transfer penalties in order to obtain Medicaid coverage as soon as possible, individuals covered by long term care insurance can feel more secure with triggering a transfer penalty since the long term care insurance will defray long term care costs during the penalty period. Then with proper planning and timing, as the long term care insurance benefit expires, Medicaid coverage will be available to indefinitely cover the individual’s long term care costs. To ensure proper planning and appropriate combining of long term care insurance benefits with Medicaid benefits, it may be necessary to consult with an Elder Law attorney.