Long-term care insurance can be an important part of your estate plan. But before you think you can rely on it to pay your healthcare expenses, you should investigate a number of misconceptions about long-term care insurance and why it is important to understand its benefits and limitations.
While it may be a good idea for some people to invest in long-term care insurance, for some it is simply not an option. Some people won’t be able to afford the premiums. Studies show that a single person with assets less than $30,000 and married couples with less than $80,000 in assets probably can’t fit it into their budget. Another problem is that even those who can afford it wait too long to apply. Once you develop certain health conditions, the insurance companies may consider you to be high risk and either charge higher premiums or deny coverage altogether. And even if you can afford it now, there is no guarantee that your premiums won’t increase if you have to use it frequently.
Another risky assumption is that your spouse will be able to take care of you in your home. But what if your partner dies first or becomes disabled? What if your condition becomes more serious than your partner can handle?
Some people may think that Medicare is a safety net. But generally Medicare does not pay for long-term care in a nursing home or assisted living facility. It is designed to pay doctor and hospital bills, not indefinite custodial care. Medicaid is also not a guarantee – it requires that you deplete all of your own assets before it kicks in. Long-term care insurance can help pay your expenses without the necessity of losing everything you have.
Even if long-term care insurance is an option for you, you still need to work it into your overall estate plan. You may be able to minimize your out-of-pocket expenses that the deductibles do not cover. Meeting with an estate planning attorney long before you may need long-term care insurance may help create an overall scheme for using it to minimize your other expenses for care.