Clients always have a plan for long-term care expenses. Rejection of long-term care insurance or insufficient assets to self-insure for long-term care expenses comes down to expecting family members or the government to pay for care. Most people are unaware that many states have two available options to recover long-term care expenses.
States may recover the cost of long-term care
Many consumers are misinformed about how long-term care expenses are paid when there is no long-term care insurance or other assets in place to cover care. Medicare doesn’t pay for long-term care services and qualifying for Medicaid limits available assets. Despite the spend down requirement, states are required to recover from the estate of the Medicaid beneficiary the cost of care paid for by the state. There is no “free” long-term care. Everyone pays for it one way the other and often it is paid for by family members or from the estate.
Medicaid recipients are not the only ones subject to recovery of long-term care expenses. At least 30 states allow long-term care providers to sue adult children of aging adults for the cost of care when assets are insufficient to pay for necessary care. Our free handout, “Filial Responsibility: What you need to know” can be downloaded and shared with clients. Sons and daughters often contribute financially to parent’s long-term care expenses. In fact, some report spending up to $10,000 annually.
Financial incentives to purchase long-term care insurance
Policymakers in state and federal governments are justifiably concerned with the rising amounts of long-term care paid for by the government. In fiscal year 2015, state governments paid more than $114 billion. By 2050, more than 20 percent of the population will be 65 or older. Imagine how much more governments will be spending without a contribution from private long-term care insurance to offset the cost of care. Partnership LTCi policies were developed to avoid this impending financial disaster. When long-term care is initially covered by a qualifying Partnership policy, if coverage is exhausted and Medicaid is applied for, the spend down requirements are significantly less than they would be without a Partnership policy in place.
Premium payments for most long-term care policies are an allowable use of pre-tax Health Savings Account (HSA) dollars. To qualify, long-term care policies must pay benefits when two activities of daily-living (ADL) are not met or when the insured suffers from severe cognitive problems. The amount of tax-free withdrawals for long-term care premium is a sliding scale depending on age. Using HSA funds to pay premiums can be an effective strategy, especially for clients who maximize contributions during high earning years intending to pay LTCi premiums from HSA funds during retirement years.
Your DIS representative will gladly explain more about government recovery and provide more detail about the advantages of Partnership policies and ways to pay for long-term care insurance.
DIS is your long-term care insurance partner. We will help you successfully present and place long-term care insurance. Whatever level of behind the scenes support you need we’ve got you covered. If you haven’t already done so, don’t forget to download our Filial Responsibility handout.