I get asked this question all the time in my practice. I want to begin by saying I am not a financial advisor, nor am I licensed to sell insurance, nor can I receive any commission from anyone who does. Thus I have no incentive to say that I think long-term care policies are important; the reasons may be different than what you might expect.
I always hear the push-back that long-term care insurance is very expensive, and that, in many cases, if you don’t use it, you lose it. Since approximately 2009, Pennsylvania has become a part of something called a partnership care plan.
Essentially, for example, if you have $200,000 of long-term care insurance that pays out, the state will allow you to exempt an additional $200,000 of assets at the time that you enter a nursing home, and still qualify for Medicaid. When the plan first came out, the concern was that the state would take over long-term care insurance, but so far that has not occurred.
I believe the reason is because these are still traditional long-term care policies that, if you don’t use it during your lifetime, you lose its value at your death.
However, more recently long-term care insurance companies have come out with what is called a hybrid policy, which is a life insurance policy that has a rider for long-term care insurance. The main reason that I like long-term care policies, specifically the ones that have riders to provide for care in the home or in the personal care home, is because more and more, people want to live at home as they age and until they die.
In all of my years of practice, no one has ever told me that they want to go into a nursing home. I often hear that they want to stay home, or they want to stay in a personal care home, but unfortunately, it is too expensive, or the assets will become completely depleted.
Although I understand that long-term care insurance or a long-term care hybrid policy may seem expensive now, trust me, the peace of mind that it will provide later when you or a loved one wants, and is able, to stay home or go to a personal care home, the money spent on the policy which allows you to do so is small compared to the out-of-pocket cost of that care, and, at least as importantly, your peace of mind.
Although we are fortunate in the state of Pennsylvania to be able to assist people in crisis, we are not as easily able to help people to stay in their homes or in a personal care home. Do yourself and your family a favor, and if at all possible secure your long-term care insurance now for peace of mind later; the earlier the better.
If you want to talk about this or any other estate planning matter your wanting more information about, contact us!