Long-Term Care Insurance

Our safety net has a hole in it.

If you or a loved one live in North Carolina and end up needing 24-hour-per-day care in an assisted living facility (like many persons in the middle stages of Alzheimer’s disease, for example), you will have to pay for your care. If your monthly income is greater than $1,247.50, including your Social Security, you will not qualify for Medicaid in assisted living even if you spend your last dime and sell your home.

Many “stay-at-home” mothers lose everything paying for assisted living. Assisted living costs at least $3,500 or as much as $6,000 per month in the Piedmont Triad. Today’s 40 and 50-year olds with decent work histories will never qualify, and North Carolina does not want to expand its State/County Special Assistance Program that helps low-income seniors pay for assisted living.  Having seen many sad situations, I bought long-term care insurance for myself at age 42.

The insurance industry, financial advisors and many elder law attorneys, including me until recently, recommend starting to consider long-term care insurance between ages 50 to 55.  Looking back at some of my experiences with long-term care insurance, I would suggest you consider purchasing it at even a younger age for 3 reasons.  First, insurance companies are getting pickier about who they are willing to insure.  If you are diagnosed with hypertension, arthritis or diabetes, the cost of the insurance will greatly increase.  Second, in my personal experience, many insurers are charging higher premiums today than 10 years ago.  A 50-year-old buying a policy today may get a better deal than a 50-year-old 3 years from now.  My wife and I found that out when we tried purchasing her a policy 3 years after purchasing mine when she was roughly my same age.  Why?  Insurers underestimated the risk of long-term care and may have set premiums too low.  Third, the older you are, the more costly long-term care insurance us and the fewer options you will have or be able to afford. I purchased a long-term care insurance policy that will cover me for my lifetime with a 5% inflation rider 8 years ago.  It will be paid up at age 52.

Think I am trying to sell you a policy? Nope, I am not an insurance agent, just your local elder law attorney.


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Giving Your House Away and Medicaid Transfer Penalties

One question I am often asked is whether clients should give their homes to their children. The usual reason for the question is the parents wanting to get eligible for Medicaid quicker and save the house for the children. The decision is not simple.  Once you give your house to your children, your children can be sued, go through divorces or bankruptcy. You can find out the hard way that your children’s problems can cause you to lose your house! If you never need Medicaid and never stay in a nursing home, you could have passed that home to your children with a basis step-up, meaning your children pay less capital gains tax when they sell the home.

The biggest trap is the Medicaid transfer penalty trap.  For every $5,500 worth of house you transfer, you and you wife potentially have a one month transfer penalty to deal with should you need Medicaid to cover your nursing home bills within 5 years.  For example, if your home was worth $110,000 at the time you gave it to your children, you or your wife would have 20 months of ineligibility for Medicaid at any time in the next 5 years should you need nursing home care. The penalty starts when you would otherwise be eligible for Medicaid. Who pays?  Quite possibly, your wife and your children will pay.

Before giving your home away, consult with an elder law attorney and determine the best approach and whether the risks are worth it. Your attorney can discuss life estates, trusts or other options that may help reduce some of the risks and help you evaluate your particular situation.


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Para-Olympian Walks

Quadriplegic Para-Olympian Walks

Modern technology can help make miracles for persons with disabilities. I recommend this article about a young man with quadriplegia being able to walk again thanks to robotic legs. If you have a loved one with a disability, consider a special needs trust to shelter their assets so that your assets can help them procure exciting new technology or communications equipment like this (which will not be covered by private insurance or Medicaid any time soon).


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3 Steps to Avoid Identity Theft or Scams

If your spouse, parent or other loved one has dementia or diminished capacity, how can you help protect them from identity theft or unscrupulous lenders?

I recommend three simple steps. First, freeze the loved one’s credit at the three credit bureaus. For instructions on freezing and unfreezing credit histories, go to http://www.clarkhoward.com/news/clark-howard/personal-finance-credit/credit-freeze-and-thaw-guide/nFbL/. Once frozen, credit reports will only be issued when you confirm them with a special password. There may be a charge of up to $10.00 each time you “unfreeze” but people with dementia or cognitive impairment would rarely need their credit unfrozen.

Second, stop the credit bureaus from selling your information to marketers by going to www.OptOutPrescreen.com. Few people realize that most junk mail comes from marketers who purchased their profiles from one or more of the credit bureaus. Opting out should greatly reduce your loved one’s credit card offers and other junk mail. People with dementia are at great risk of accepting these offers and getting into financial trouble long before their family notices any problem.

Third, register your loved one’s telephone number or numbers in the national Do Not Call Registry at www.donotcall.gov or by calling 1-888-382-1222 (TTY 1-866-290-4236). Phone numbers of any type can be registered. The FTC bans automatic dial or “robo calls” to cell phones, so cell phones should not need to be registered, but you may do so.


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