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Long Term Care Insurance Update

Armen Hareyan's picture

Benefits of long term care insurance

Now that the Deficit Reduction Act has been in existence for over a year, most states have enacted regulations or laws that define the extended waiting period for long-term care benefits paid by the State. Regardless of the value or intention of gifts, in many cases, a five-year waiting period for eligibility for Federal and State long-term care benefits remains a concern for most individuals who have assets that must be used for their care, even if the assets have been gifted within the previous five years.

In order to protect your assets without having to give them away, one option is to purchase long-term care insurance. This covers the cost of nursing home or in-home care in the unfortunate event that you require services.

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One of the benefits of long-term care insurance is that you don't have to give away your assets until you need services or become incapacitated. Then, presuming you have a policy that provided at least five years of health insurance coverage, you may gift your assets. Your care will be covered by your insurance company for the 5-year look-back/waiting period, and upon termination of that health insurance coverage, you will then potentially qualify for Medicaid.

In the event that you are not able to make the gift yourself at the time of institutionalization, your attorney-in-fact, who is the person named under your durable power of attorney, will hopefully have the authority to make gifts and transfers on your behalf.

The benefits that you should consider when purchasing your long-term care insurance policy will be determined by your income, tolerance for paying premiums, and the value of the assets you want to preserve. In several states, there is a so-called "partnership" plan, which means if you have minimum long term care insurance coverage, such as $200,000, then you will be able to maintain $200,000 worth of assets without any penalty or waiting period.

In Massachusetts, for example, if a certain minimum coverage is maintained at the time of institutionalization, then assets such as your home may be protected regardless of their value, providing that the coverage at the time of institutionalization meets the requirements of the State Medicaid office.

While long-term care insurance is touted as a significant benefit, many people should consider it a requirement similar to life, homeowner's and disability insurance. This includes singles, married couples and individuals in same sex marriages or unions, since, in many cases, your assets will have to be used to pay for care prior to the government stepping up to the plate to provide any coverage. It is very important that the proper amount of long term care insurance coverage be purchased. - You can learn more about Hyman Darling by visiting his webiste.