Planning for Long Term Health Care Essential to Protect your Hard Earned Assets

No one likes to think about it, but most of us will require long term care at some point in our lives, whether it be in the form of assisted living, in-home health care services, or a nursing home.

Paying for such care is one of the most difficult financial challenges many families will ever face. The cost continues to increase rapidly as the nation’s population ages and demand skyrockets. The average cost of nursing home facilities in New Jersey now exceeds $200 per day. Many people do not realize, until it is too late, that Medicare typically covers only short term stays in a nursing facility. Once Medicare stops paying, families must pick up the tab, often consuming assets they have accumulated over an entire lifetime.

Families who have few assets, or who have used up what assets they had, often rely on Medicaid. In fact, long term care expenses are straining many state Medicaid budgets. Relying on Medicaid has three major drawbacks:

1. You need to have depleted your assets to qualify for Medicaid. Formulas for qualifying vary by state, but Medicaid is, after all, intended for the poor. Therefore, you must become "poor" to qualify. This is clearly NOT an effective financial plan.

2. Medicaid limits you choice of facility. Many facilities reserve a certain number of slots for Medicaid patients, with the remaining reserved for private payers. It may not be surprising that the best facilities may have all of their Medicaid slots full, forcing Medicaid patients into a less choice facility.

3. Medicaid will recover expenses from your estate. Many people don’t realize that Medicaid is not truly a “free ride”. As Medicaid budgets have become stretched thin, most states will place a claim against the patient’s estate, including the primary residence, to reimburse themselves for expenses incurred. Often a patient’s entire estate will be consumed by Medicaid claims. There are usually limits to the amount of assets Medicaid can claim when there is a surviving spouse. The amount and nature of these limits vary from state to state.

Many people are turning to long term care insurance to protect their families, their spouses, and their estates. Insurance is relatively inexpensive for those who plan ahead and purchase policies while they are still in good health. Couples in their 50's and 60’s can usually purchase affordable insurance, if they are in reasonably good health. As can be expected, the costs become prohibitively expensive as the potential insured increases in age and chronic health problems set in.

As a financial planning firm, Frontier's advisors will help you look at long term care planning as part of your overall financial picture. If long term care insurance makes sense, we can recommend the most cost effective provider and provide quotes. We can also help you explore other avenues, including reverse mortgages, or self insurance. To learn more about how you can protect your hard-earned assets, please contact us for a free, no-pressure consultation.

Frontier Financial Planning and Capital Management is a Somerville NJ based planning firm which prides itself on providing reliable advice based on client needs to individuals and small businesses throughout central New Jersey. For more information on Frontier Financial Planning, please call (908) 725-9001 or email info@frontierplanning.com.

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