 Medicaid
Maze
Are you a mature American (i.e., age
65 or older), do you care about someone who is, or do you anticipate
becoming a mature American yourself one day? If so, then you are in good
company according to U.S. Census Bureau statistics. In 1960, there were
nearly 17 million mature Americans. Today, there are more than 35
million and by 2010 there will be some 40 million mature Americans.
Thereafter, due to the graying of the Baby-Boom generation, we
will see that figure jump to 53 million in 2020, and to 70 million in
2030! As this mature population increases, so will the need for Elder
Law services.
What is Elder Law?
Generally speaking, Elder Law is the
holistic application of general legal principles to the specific
emotional, logistical and financial needs of mature Americans. Many
mature Americans are concerned with two fundamental threats to their
dignity: (1) becoming incapacitated, and thereby losing control to the
court system regarding their personal, health care and financial
decisions; and then (2) running out of money due to the catastrophic
costs of long-term care, and ending up on welfare. Fortunately, both of
these threats may be minimized, or even avoided, through properly
coordinated legal and financial planning.
Incapacity Planning
As the number of birthday candles increase
on your birthday cake, so do the odds that you will become incapacitated
due to an injury or illness. Whether incapacity strikes suddenly, as
with an accident or acute illness, or gradually, as with Alzheimer's,
the consequences are the same. Either you will have appointed the
back-up decision-makers of your own selection through proper legal plans
or, by default, the court system must step in to appoint them for you
... under the ongoing supervision of the court. Note: This default
approach will employ at least three lawyers and can be rather expensive
and invasive of your privacy. Accordingly, consider this default the lawyer
full-employment program.
Long-Term Scare
Did you know that after age 65 there is a 48
percent chance that you will need care in a skilled nursing facility?
After age 80 the odds that you will need skilled nursing care jump to
nine in 10, or 90 percent. If you are age 65 and married, the odds are
70 percent that you or your spouse will need skilled nursing care. The
average nursing home stay, by the way, is 2.5 years.
Long-term care is expensive. Nationally
speaking, a year in a nursing home is estimated to cost an average of
$57,000. Is it any wonder that 50 percent of mature couples become
impoverished within a year after either spouse enters a nursing home?
The number jumps to 70 percent for widowed or single persons.
By the way, forget about Medicare paying for
your chronic long-term care needs. Medicare only pays for acute
nursing home care for up to 100 days, and even then your eligibility and
the payments are subject to very strict requirements. Remember, too,
Medigap (i.e., Medicare Supplement) policies typically will not pay for
your chronic long-term care needs either.
What about giving away your assets to your
loved ones to qualify for Medicaid (i.e., welfare)? Legally speaking,
any transfer of assets for less than fair market value may render
you ineligible for Medicaid assistance for 60 months or more under the
complex and confusing web of Medicaid Regulations. And transferring
assets can be hazardous for other reasons. What will happen to you if
you are rendered ineligible for Medicaid assistance, AND those to whom
you transferred your assets lose them ... whether through squandering,
divorces, lawsuits or bankruptcies?
Long-Term Solutions
The key to proper long-term care planning is
to plan now rather than react later. There are numerous
legitimate strategies to preserve more of your assets ... if you have
time to plan. One of the best strategies may be to insure your financial
security through proper Long-Term Care Insurance.
LTC Insurance
No one relishes the idea of paying insurance premiums of any kind. After
all, you can pay and pay and pay and never collect. If you are
fortunate.
The purpose of insurance is to transfer a risk
that you can afford (i.e., the payment of a premium with no guarantee of
its return) to cover a risk you cannot afford. For example, what
homeowner does not insure their personal residence from damage due to
fire? Or, what automobile owner does not insure their auto from damage
due to a collision? Consider this: The odds of a major fire insurance
claim are one in 88, with an average claim of $2,000. The odds of an
auto insurance collision claim are one in 47, with an average claim of
$8,000.
Against this backdrop, why would any
responsible mature American (i.e., age 65 or older) not insure against
the financial risk of requiring long-term care at some point? Consider
this: The odds are nearly one in two that a seasoned citizen will
need long-term care for about 2.5 years at an average cost of $57,000
per year, with an average claim in excess of $100,000.
The LTCI Alternative
Fortunately, an appropriate Long-Term Care Insurance (LTCI) policy
can be designed to fit almost any budget. Most LTCI policies share some
common features you should know, to include the following:
- Benefit Amount: How much and how long will the policy pay?
- Benefit Triggers: When will the policy pay benefits?
- Inflation Protection: Will the purchasing power of the Benefit
Amount increase?
- Level of Care: Are Custodial and Intermediate Care covered, along
with Skilled Nursing Care? Is Home Health Care covered?
Caveat Emptor!
Caveat Emptor! is Latin for Let
the Buyer Beware. With more than 100 companies selling LTCI, this is
an appropriate warning. When shopping for an appropriate LTCI policy,
remember that financial strength is a key consideration. As with any
form of insurance, the policy is only as good as the ability of the
insurance company to pay your claim. Check out the financial strength
and reputation of the insurance company before you sign on the dotted
line.
There are several established insurer rating
services, such as A.M. Best Company (www.ambest.com),
Fitch, Inc. (www.fitchratings.com),
Moody's Investor Service, Inc. (www.moodys.com),
Standard & Poor's Insurance Rating Services (www.standardandpoors.com),
and Weiss Research, Inc. (www.weissratings.com).
Visit these services online or at your local
public library.
Reputation also is important. Contact your
state's Insurance Commissioner regarding an insurance company's status
and any complaints from policyholders.
Finally, contact the National Association of
Insurance Commissioners for a copy of the Life Insurance Buyer's
Guide, and other valuable resources, by phone (816) 842-3600 or
online at www.naic.org.
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