Livens & Reed, PLLC

Long-term care insurance makes sense for elderly planning

Long-term care insurance (LTCI) is usually a good idea for someone 55 to 70 who wants to avoid the potential financial hardship that can occur if a nursing home or home-care becomes necessary. The U.S. Dept. of Health and Human Services estimates nearly 70 percent of people who reach age 65 will need long-term care at some point. That statistic of course applies across the board, including in Texas. Unfortunately, less than one-third of people over age 50 have begun to plan for their potential long-term care needs.

An LTCI policy will pay a daily amount to the provider based on the coverage purchased. The premium is based on age, extent of coverage, health and similar factors. Although seniors have often been reluctant to be bound to a premium for years on end, it may be possible to limit that period to five years.

A five-year "look back" period must be established for purposes of becoming qualified for Medicaid funding of long-term care benefits. LTCI can play a part in a comprehensive elder law plan that includes a Medicaid Asset Protection Trust. Such a trust is set up to receive assets to hold long enough to create the five-year look back period required for a Medicaid nursing home.

During the first five years, while the trust is being perfected, LTCI is an ideal way to protect against the need for a nursing home before the five years are established. When the five years have successfully accrued, then an evaluation can be made whether to drop the LTCI. Another option may exist: hybrid policies exist that allow your heirs to receive life insurance benefits if the long-term care protection is not used.

In Texas and other states, it's advisable to coordinate the long-term care insurance planning closely with your attorney and financial adviser or insurance specialist. This will make sure that the bases are covered and no conflicts exist. Your heirs should be involved and informed of the intended purposes for the LTCI.

Source:, "Column: Long-term care insurance as part of an estate plan", Anthony J. Enea, Oct. 12, 2014

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