Long Term Care and Planning

long term care insurance

by Alyson Fudge 

Today was another in a long line of consultations in which an aging couple expressed concern that if they needed nursing home care, the “government will take everything we have.” First and foremost, let’s put this expression to rest. The government is not going to “take” anything from seniors. Not your bank accounts, not your house, not your investments. What the government will do (and by “government” I’m now speaking specifically of the State of South Carolina) is try to put itself in a position to be repaid if the government ends up paying for your long-term care because you lack the income and assets to pay it yourself.

Getting paid back money that was spent on you and your care is not the same thing as “taking,” and the government would only need to be repaid if you needed them to pay your expenses because you didn’t plan on, or were not able to, pay for yourself. When the government pays for your long-term care, that means you have applied for, and are receiving, Medicaid.

Not Medicare (your health insurance), but Medicaid.

Medicare does not pay for long-term care. Tri-Care does not pay for long-term care. Blue Cross and Humana do not pay for long-term care. These are all examples of health insurance—the policies which pay for hospital stays, doctor’s appointments, prescription medications, nursing home rehabilitation short-term stays, home health care (in which a nurse stops by your house for a few minutes to check on you once or twice a week for a few weeks only following a stay in the hospital for certain reasons) and hospice. Please note that the word “care” or “caregivers” was not in that sentence.

The reason for that omission is intentional—health insurance pays for medical care and long-term care is not considered to be medical care. So caregivers are not considered to be medical care, independent living is not medical care, assisted living is not medical care and nursing homes are not considered to be medical care. These are all examples of long-term care. And if you lack the financial means to pay for this type of care privately, the government will help you via Medicaid if your income and liquid assets are below a certain level. Once you die, your house will be the recipient of a lien.

A lien is merely a legal way of making sure that the house cannot be sold or refinanced without paying off a certain legally-protected debt first. And in this case, that debt is merely the money the government has already paid on your behalf for your care because you couldn’t pay for your care yourself. When you ask the government to pay your expenses for you, you have to agree to let them try to get paid back when you die. It’s just part of the deal.

So how do we pay for long-term care privately without involving the government? Well, you can talk to financial planners and CPA’s about savings, investments and other financial products that, if established early enough and funded sufficiently, can (hopefully) give you enough money to pay for long-term care out of pocket. The other alternative is to buy a long-term care insurance policy. The couple I spoke with this morning immediately eschewed that option as being “too expensive.” The problem is that they haven’t spoken to a professional dealing in long-term care insurance policies, so they are just assuming that premiums will be too high.

Maybe that is a safe assumption, but then again, maybe it is not. The question can never be answered if it is never asked. In addition, even assuming that the premiums are unaffordable, how then can the cost of paying the nursing home yourself (which is extremely expensive and becoming more so by the day) be affordable. If you can’t afford to pay a little, how will you afford to pay a lot? It just doesn’t make sense. It is crucial that individuals who are aging or who are planning to age recognize the cost of long-term care, the importance of legal documents like powers of attorney for finances and for medical issues, and options that do exist in time to fully prepare themselves for the realities of aging.

Please consult an elder law attorney and make sure that you have your documents in place as well as other reputable professionals who can assist you planning so that you and your family never have to experience the government “taking” what it was forced to give you because you couldn’t provide for yourself.

Remember—the question which is never asked is never answered. Please start asking questions now.