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Long-term care insurance

3/2/2016

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Long-term care insurance can be useful for protecting assets from long-term care costs. However, it is important to keep in mind the challenges in choosing the right long-term care insurance plan.





What is long-term care insurance?: Long-Term Care insurance is insurance you purchase that is used to pay for the costs of long-term care. Such care includes care in nursing homes, assisted living, and home-care. The insurance begins payments when you are no longer able to perform two of the six activities of daily living (ADLs). These activities include:  Continence (the ability to hold urine), Transferring (being able to move from one spot to another),Toileting, Dressing, Bathing, and Eating.

What types of long-term care insurance coverage are there?: When you purchase long-term care insurance, you generally select your coverage based on two scales. These scales are:
  1. A daily benefit amount, calculated in dollars per day. The coverage can range from as low as $100 per day to as high as $500 or more per day.
  2. A benefit period. This is the length of time that the long-term care insurance will make payments for. The benefit period can range from as short as 1-2 years to plans that will stretch on indefinitely. 

When choosing the daily benefit amount and the benefit period, what should I take into consideration?:
  • Make sure that the daily benefit amount is sufficient to cover your care.
    • The current minimum nursing home daily rate in a semi-private room in Racine, WI is $269 per day. Be certain that your daily benefit amount can meet this need. (Genworth Survey)
      • Further, look at nursing homes that you may be interested in to see what their daily costs look like. This will give you a better idea of the daily benefit amount you may need.
    • The cost for having a home health aide for approximately six hours per day is approximately $140 per day. Round the clock home care would be approximately $530 per day. Be sure to keep these costs in mind, if it is your desire to stay in your home. 
  • Make sure that the benefit period is long enough.
    • Long term care insurance generally pays out benefits over a set period of time, ranging from one year to five years. It is very important to choose a long enough period of time to cover a lengthy incapacity.
      • Long-term care insurance may begin paying out during a time when your costs of care is lower. Even if your daily benefit amount greatly exceeds the cost of care you are receiving, the benefit period is still counting down.
When should I avoid long-term care insurance?

Costs for these long-term care insurance plans can be large: according to estimates from the Federal Long Term Care Insurance Program, a sixty year old individual would pay approximately between $5200 and $7800 per year for a benefit amount of $300 per day over a benefit period of 3-5 years.

If the cost of long-term care insurance is too high, it is probably best to consider having an Elder Law Attorney help with planning that will protect your assets while helping you to qualify for Medicaid, and have the state pay for your long-term care. Planning for Medicaid should be done at least five years in advance of your need for care, and can help protect your assets at a lower cost than the long-term care insurance. 

At Heller-Neal Law Offices we are proud of our asset protection plans. Contact us today to learn how a good asset protection plan can help protect you from the costs of long-term care.

Contact Attorney Derrick Heller-Neal today at (262) 902-0595 or via email at hellerneal@hellerneal.com to set up a free consultation.

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    Derrick Heller-Neal is an Estate Planning and Elder Law Attorney practicing in Wisconsin

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