Long-term care insurance is a form of insurance that you can purchase so that you are covered if you need help with your activities of daily living. Why would you need this type of insurance if you are going to qualify for Medicare? Let our elder law attorney provide the answer in this blog post.
What is Medicare Gap?
You qualify for Medicare through the accumulation of retirement credits. These credits are earned while you are working and paying FICA taxes. Under currently existing laws, you will become eligible for Medicare coverage when you reach the age of 65 if you have accumulated at least 40 retirement credits throughout the course of your working career.
The limitations of Medicare
One of the common issues in elder law is Medicare. This program will help with covered care and treatment, but you should be aware of the fact that there are co-payments, deductibles, and premiums to contend with, and they can add up. In addition to the above, Medicare does not pay for long-term care at all. If you were to need help with your day-to-day needs at some point in time, you would have to look elsewhere for financial assistance.
Assistance may well be needed because long-term care is very expensive. It can cost well over $100,000 per year to stay in a nursing home and people often spend multiple years in these facilities.
Consider obtaining long-term care insurance
Now that we have set the stage with regard to long-term care expenses and Medicare, you can see why long-term care insurance is relevant. You could take out a long-term care insurance policy, and the company would help you pay for living assistance if and when you do in fact need long-term care.
The cost of the long-term care insurance will depend on a number of factors, including your age and the extent of the coverage that you will receive. You should do your research and understand exactly what you would expect to be charged for the care, and you should closely examine the terms of the policy that you are considering.
What is Medicaid?
Medicaid is a government program that will pay for nursing home care, and many people do use Medicaid to pay for long-term care. You are probably aware of the fact that Medicaid is only available to people with significant financial need.
There is a limit on countable assets that is just $2000, so people often give away assets before they apply for Medicaid to pay for living assistance. However, if you wait until you find out that you actually do need long-term care, you run into the five-year look-back. Your eligibility will be delayed if you give away assets within five years of applying for Medicaid coverage.
Medicaid and the look-back period
Before you enter into any agreement, you should probably discuss your options with a licensed elder law attorney. Your attorney could help you understand the things to look for if you are going to purchase long-term care insurance, and you can also explore other options.
The duration of the period of ineligibility would be based on the average cost of long-term care as it is determined by the state. For example, let’s say that the average monthly cost for nursing home care is $10,000, and you gave away $200,000 during this look-back period. The $200,000 would have paid for 20 months of nursing home care, so your eligibility would be delayed by 20 months.
This is where long-term care insurance can enter the picture. If you act at the right time, you could take out a long-term care insurance policy to cover yourself during a period of Medicaid ineligibility.
Advance directives for health care
Disability planning will also involve the execution of legally binding documents called advance directives for health care. Doctors can sometimes keep people alive indefinitely through the utilization of artificial life-sustaining measures. You state your preferences regarding the use of these measures if you execute a living will.
A health care proxy can be added to name someone to take care of your healthcare decision-making beyond the use of life support. You can also add a durable power of attorney to name a financial representative.
Attend a free seminar today! If you have questions regarding disability planning, Medicaid or any other elder law matters, please contact the experienced attorneys at the Law Offices of Mary A. Miller, P.C. for a consultation. You can contact us either online or by calling us at (914) 939-6565. We are here to help!