Your estate plan should consider a wide range of topics and achieve a host of inter-related goals. A common component that should be found in almost all comprehensive estate plans is a nursing home, or long-term care (LTC), component. Given the odds that you will one day need LTC, and the high cost of that care, creating a plan to pay for that care is imperative. One option for covering the costs of LTC is to purchase a separate, stand-alone, long-term care insurance policy. To help you decide if that is the right option for you, the Bellevue estate planning attorneys at Legacy Estate Planning, LLC explain long-term care insurance.
Will You Need Long-Term Care?
No one can tell us who among us will end up in LTC in the future; however, from the time you reach age 65 you stand about a 50 percent chance of eventually needing LTC. We also know that the odds of needing LTC increase with each passing year. By age 85, you will have about a 75 percent chance of ending up in an LTC facility prior to your death. Keep in mind that if you are married, your spouse has the same odds of needing LTC as you do. Given the odds, it makes sense to plan for the possibility of needing LTC at some point because the cost of that care will likely be prohibitive. Nationwide, the average monthly cost of LTC runs over $8,000 per year as of 2021. In the State of Washington, however, you can expect to pay more than the national average with an average monthly cost of almost $11,000 for 2021.
How Will You Pay for LTC?
Most health insurance policies do not cover expenses related to nursing home care, personal care at home, assisted living facilities, and/or adult daycare. Do not count on Medicare to cover these expenses either because Medicare only covers long-term care (LTC) expenses under very limited circumstances, and even then, only for a short period of time. Many health insurance providers do, however, offer separate LTC policies at an additional cost.
Long-Term Care Insurance Basics
Long-term care insurance is essentially just what it sounds like – a standalone insurance policy that covers costs associated with nursing home care and other similar LTC facilities and services. Because there are no universally covered services, however, it is imperative to read the fine print and make sure you know what a policy covers and what it excludes. When evaluating an LTC insurance plan, may attention to when the coverage begins. Most plans have an “elimination” or “deductible” period during which the policy will not pay out benefits. Think of this as a “waiting period” that could last from zero days to a year from the time you qualify for LTC. To qualify for benefits under an LTC policy you usually need a doctor to certify that you have lost the ability to engage in at least two activities of daily living: eating, bathing, dressing, toileting, walking, and/or continence. Some policies will also consider you qualified for benefits if you suffer cognitive impairment. The final important consideration when evaluating or comparing LTC policies is the annual or lifetime maximum. Some policies will only pay out up to a specific dollar amount each month/year and/or will cap your benefits at a dollar amount for your lifetime. This can clearly impact the value of the policy.
As far as premiums are concerned, they are typically based on age, health, and policy benefits. The younger you are when you apply, the lower your premiums will be; however, the longer you will likely pay on the policy before needing benefits. Ultimately, whether an LTC insurance policy is something you want to include in your estate plan is a personal decision. You should, however, discuss the option to include Medicaid planning in your estate plan as well with your nursing home planning attorney before making the decision to purchase LTC insurance.
Contact Bellevue Estate Planning Attorneys
If you have additional questions or concerns regarding long-term care planning, contact the experienced Bellevue estate planning attorneys at Legacy Estate Planning, LLC by calling (425) 455-6788 to schedule an appointment.