Medicaid Maze

     Are you a mature American (i.e. over age 65), do you care about someone who is, or do you anticipate becoming a mature American yourself one day? If so, then you are in good company according to U.S. Census Bureau statistics. In 1960, there were nearly 17 million mature Americans. Today, there are more than 35 million and by 2010 there will be some 40 million mature Americans. Thereafter, due to the graying of the Baby-Boom generation, we will see that figure jump to 53 million in 2020 and to 70 million in 2030! As this mature population increases, so will the need for Elder Law services.

What is Elder Law?

     Generally speaking, Elder Law is the holistic application of general legal principles to the specific emotional, logistical and financial needs of mature Americans. Many mature Americans are concerned with two fundamental threats to their dignity: (1) becoming incapacitated and thereby losing control to the court system regarding their personal, health care and financial decisions; and then (2) running out of money due to the catastrophic costs of long-term care and ending up on welfare. Fortunately, both of these threats may be minimized or avoided through properly coordinated legal and financial planning.

Incapacity Planning

     As the number of birthday candles increases on your birthday cake, so do the odds that you will become incapacitated due to an injury or illness. Whether incapacity strikes suddenly, as with an accident or acute illness, or gradually, as with Alzheimer’s, the consequences are the same. If you have not appointed back-up decision-makers of your own selection through proper legal plans then, by default, the court system must step in to appoint them for you … with ongoing court supervision. This "default" approach can become an expensive invasion of your privacy.

Long-Term Scare

     Did you know that after age 65, there is a 48% chance that you will need care in a skilled nursing facility? After age 80 the odds that you will need skilled nursing care jump to 9 in 10, or 90%. If you are age 65 and married, the odds are 70% that you or your spouse will need skilled nursing care. The average nursing home stay, by the way, is 2.5 years.
     Long-term care is expensive. Nationally speaking, a year in a nursing home is estimated to cost an average of $57,000. Is it any wonder that 50% of all mature American couples become impoverished within a year after either spouse enters a nursing home? The number jumps to 70% for widowed or single mature Americans.
     By the way, 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 Supplement) 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 (i.e. welfare)? 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. As a practical consideration, what will happen to you if you are rendered ineligible for Medicaid assistance as a result of your "gifts," and the recipients have subsequently lost them through squandering, divorces, lawsuits or bankruptcies? These are serious risks.

Long-Term Solutions

     The key to proper long-term care planning is to plan now rather than react later. There are numerous legitimate strategies to preserve more of your assets ... if you have time to plan. For example, under a special federal law called the Spousal Impoverishment Act, married couples may preserve more assets for the non-nursing home resident, even if the other spouse is Medicaid-qualified. Some mature Americans have turned to Reverse Mortgages (i.e. borrowing against the equity in their homes) to pay for their long-term care. The best strategy may be to insure your financial security through proper Long-Term Care Insurance (LTCI).

Conclusion

     As you can see, Elder Law is complex. Its scope extends far beyond the issues introduced in this article. Only through a confidential consultation with qualified legal counsel may you learn the appropriate solutions for your unique Elder Law challenges.

Long-Term Care Insurance

     No one relishes the idea of paying insurance premiums of any kind. 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, consider the financial risk of long-term care. The odds are nearly 1 in 2 that a person over age 65 will need long-term care for about 2.5 years at an average cost of $57,000 per year, with an average claim in excess of $100,000!

The LTCI Alternative

     Fortunately, an appropriate Long-Term Care Insurance (LTCI) policy can be designed to fit almost any budget. 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 and Intermediate Care covered, along with Skilled Nursing Care? Is Home Health Care covered?

Caveat Emptor!

     That is Latin for Let the Buyer Beware. With more than 100 companies selling LTCI, this is an appropriate warning. When shopping for an appropriate 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.
     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).
     Visit these services online or at your local public library. 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 copy of the Life Insurance Buyer's Guide, by phone (816) 783-8300 or online at www.naic.org/insprod/catalog_pub_consumer.htm.

Summary

     The scope of the insurance options available to your Long-Term Care protection extends well beyond this brief overview. You should seek competent legal counsel to interpret the contractual provisions of any LTCI policy before submitting an application for coverage. It is always better to know in advance of the thunderstorm whether your umbrella has holes in it.

Copyright © 2005 Integrity Marketing Solutions. All rights reserved. Some artwork provided under license agreement. This publication does not constitute legal, accounting or other professional advice. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material.