5 Things They Don’t Want You To Know
When government assistance is not an option, care can be paid for privately through long-term care insurance, short-term care insurance, reverse mortgages, annuities or trusts.
Long term care insurance must be purchased in advance, and coverage may vary depending on health status and modifiable risk factors. Two criteria must be met in order to qualify:
1. Benefit triggers: Assessment is filled out by medical professionals to determine eligibility in regards to cognitive impairments or Activities of Daily Living (ADLs). These benefits will be outlined in a Plan of Care provided by the insurance company.
2. Elimination period: Best described as a “deductible” in terms of time rather than cost where a specified amount of time must elapse after a benefit trigger before the insurance company will begin to pay for services. Can choose between a 30, 60 or 90 day elimination period at the time of purchase. Depending on the plan, the insurance company may require you to pay for services out of pocket during the elimination period.
When long-term care insurance is not an option, short-term care insurance can be purchased. These plans generally covers the same services as long-term care insurance (i.e. home health care, assisted living, skilled nursing, hospice and adult day care) but only for one year or less. Short-term plans are more economical and insure a wider population. They are designed to cover care for a limited period of time.
A reverse mortgage is a loan that allows you to retain ownership of your home while receiving cash against the value of it. You can receive the cash as a lump sum, monthly payment or line of credit. This is ideal for paying for skilled nursing care as you must be age 62 or older and have primary residence in the home. Reverse mortgages do not count towards Medicaid eligibility and does not affect Social Security or Medicare benefits as long as you spend the income in the month you receive it.
Annuities can be purchased regardless of health status, but can affect your eligibility for Medicaid.
Immediate annuities provide you with a series of monthly income payments for a specified amount of time from a single premium payment. The amount you receive depends on age, gender and amount of initial premium, and this income can affect tax rates and is not adjusted for inflation.
Deferred long-term care annuities are only available to people age 85 and older. It creates two separate funds for long-term care expenses and residual income that can be spend on whatever have. But you must wait until a predetermined date to access both. This type of annuity can be transferred to an heir if it goes unused.
Trusts allow you to transfer assets to another person, such as a child or loved one.
To Contribute a charity, you can reduce your tax burden while using your assets to pay for care. Charitable remainder trusts allows you to reduce the tax. This may affect Medicaid eligibility and only works if the charitable donation is significant enough. After death, the remainder of money in the charitable account will be donated to the charity of your choosing.
Medicaid disability trusts are managed by a nonprofit organization for disabled persons who are younger than age 65. This is the only type of trust that does not affect Medicaid eligibility, but does still have tax implications.
Depending on your needs and qualifications, one or more of these optional pathways can help ease the burden of paying for long-term care and services. To help determine which route will be most effective for you, please visit http://longtermcare.gov for more information.