Paying for Long Term Care
June 13, 2017 Posted by Richard Chamberlain

As we get older, each of us must begin to contemplate the possibility of needing long term care (LTC) at home, in assisted living, in a nursing home, or some other setting. The options for how to pay for that care are often confusing and can involve difficult discussions. There are three basic options for paying for the costs of LTC: (1) self-pay, (2) LTC Insurance, and (3) government assistance.

Self-pay is self-explanatory – you build up a large enough reserve of assets and pay for the care yourself. This is often the most difficult option, in that we don't know how much in assets will be needed. The kind of care that will be needed, the cost of that care, and how long that care will be needed will all impact the total overall cost of care. Some people have saved up hundreds of thousands of dollars on the “self-pay” option, only to find that after a few years, all of their savings were spent. They then are forced to move to the government assistance option.

Long Term Care Insurance can be a very good option and can cover much, if not all, of the cost. As with all insurance, LTC Insurance shifts the burden and risk of the cost of care to an insurance company, in exchange for an insurance premium. It's possible to purchase an insurance policy that will provide a daily benefit to help pay the cost of care. There are a lot of options in these policies, such as the amount of the daily benefit, the length of the policy period (how many years the policy will provide benefits), or whether there is an adjustment for inflation in the daily benefit paid. All of these variables will affect the amount of the premium for the LTC Insurance. If you're interested in learning more about your LTC Insurance options, we recommend that you speak with a licensed insurance agent who specializes in LTC Insurance.

Government health assistance options are the most confusing of all because there are two very similar sounding programs, Medicare and Medicaid, which both provide assistance with healthcare costs, but these two programs provide assistance in two very different ways. Medicare is the program that is much closer to a typical health insurance plan. You pay a premium of some kind and Medicare covers some of the costs of doctor's visits, medications, surgeries, hospital stays, etc. Medicare also covers a minimal stay at a LTC facility, but it will only cover at most 100 days, and is only guaranteed up to 20 days. Medicaid, on the other hand, is not insurance; it is a wide ranging program that covers everything from food stamps to extended LTC stays. With Medicaid there are no premiums to pay, but an individual must qualify for benefits based on a set of income and asset requirements. See our article on Medicaid Qualification.

Medicaid will cover a portion of the cost of the stay at a LTC facility indefinitely once an individual has qualified for the program. The basic rule is that Medicaid will cover the cost of the care and medications above the amount of an individual's income. For example, assume that Mary was qualified for Medicaid and was staying in a LTC facility. If Mary had income of $1,500 per month and had a monthly LTC bill of $6,000 per month, Mary would pay approximately $1,460 for her care (she's allowed to keep $40 of her income), and Medicaid would pay the rest. In this way Mary is able to receive the care she needs without having to have insurance in advance or come up with the entire $6,000 per month.

In this process of deciding how to pay for LTC costs, many individuals either don't plan, plan late, or choose only one of the options available. While it is almost never too late to do some planning, by being proactive and planning early, you have the most options and can make the best plan for yourself and your family. The sooner the planning is done, the better your options and results will be. In addition, consulting with a competent advisor that can assist you in creating a comprehensive plan can help to avoid the pitfalls of any of the three options above.

If you have any questions about how to plan for paying for the costs of long term care, call our office and schedule an appointment for a free half-hour consultation with one of our elder law attorneys. Call us at 419-872-7670 to make your appointment today.

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Richard Chamberlain Richard M. Chamberlain is the founder and principal attorney of the Chamberlain Law Group, Ltd. and is a member of the Ohio State Bar Association section on Estate Planning, Trust and Probate Law. He has an undergraduate degree in Economics, magna cum laude, from Tulane University (1989) and received his law degree from Florida State University (1992), where he was a member of the Law Review. Richard was born in Port Sulfur, Louisiana (about an hour south of New Orleans – yes, there is land an hour south of New Orleans) in 1967. When he was 3, his family moved to Baton Rouge, where they lived until he was in college at Tulane University in New Orleans. After graduating from Tulane, Richard attended The Florida State University College of Law in Tallahassee, Florida, where he earned his law degree in 1992. While practicing law in Tampa, Florida, Richard met a beautiful girl named Kelly Sancraint (a transplant originally from Toledo, Ohio). They were soon married, and as they began their family, they made the decision in 1998 to move back to the Toledo area to be near family. Richard founded his own law practice (“The Law Office of Richard M. Chamberlain, Ltd.”) in Perrysburg, Ohio in 2007, focusing on the practice areas of estate planning and estate administration, business formation and planning, elder law and real estate law. In 2012, with the addition of his first associate attorney, the name of the firm was changed to “Chamberlain Law Group, Ltd.” Richard is a member of WealthCounsel, a cooperative alliance of nationally recognized estate planning attorney members from across the country. as well as being a member of The Rotary Club of Perrysburg and the Perrysburg Chamber of Commerce. Richard also serves on the Board of the Perrysburg Schools Foundation, and he serves in several ministries at CedarCreek Church. Richard and Kelly have 4 daughters, 1 son-in-law, and 1 granddaughter, who keep them both very busy with their varied interests.