Long-Term Care Insurance Considerations
All of my posts up to this point in time have been written by me based upon my research of law or actual cases. This post deals with questions posed to a long-term care insurance expert, Geoffrey S. Close, a Wealth Advisor with Morgan Stanley of Morristown, New Jersey. I have worked closely with Mr. Close on several matters and I am sure you will find this information valuable in both your Medicaid and long-term care activities.
1. Are there different types of long-term care insurance?
There are two types of long-term care insurance – pay-as-you-go and a single premium with refund.
2. Does long-term care insurance cost less than double for a married couple?
Yes, the married could pay less than double a single person.
3. What are the options under long-term care insurance?
Options relate to home care, institutional care, elimination time periods (deferral of coverage), inflation riders, etc.
4. Does the new law make long-term care insurance more significant?
Yes, mainly because of the 60 month look-back.
5. Explain the need for home care to be covered under long-term care insurance.
Many people will elect to remain in their homes with custodial care. Medicaid does not pay for long-term care at home.
6. Why should somebody pay for increased coverage due to the C.P.I.?
The increasing costs of nursing homes render a C.P.I. adjustment advisable.
7. Explain what “rated” long-term care insurance means.
Rated means increased costs due to a condition such as dementia or reduced mobility.
8. Explain the need for long-term care insurance for someone with little money and someone with significant money.
A person with little money may not need it because he will qualify for Medicaid. A person with significant money may want to preserve his estate if they go in a nursing home.
9. Is there a best age for purchasing long-term care insurance?
The earlier the start, the total overall out-of-pocket costs are less.
10. Do you recommend coordinating your long-term care insurance proposal with an elder law attorney if the family has one?
Absolutely, a family should coordinate their long-term care plans with an elder law attorney.
11. If a family’s income increases, is there a procedure for increasing their long-term care insurance?
You can always increase your long-term care insurance, but the age and medical status at the time of increase will be considered.
12. If one spouse is either uninsurable or highly rated and a second spouse is in excellent health, how is this situation resolved for cost purposes?
The rated costs for the unhealthy spouse can be ameliorated if there is a healthy spouse with a simultaneous application.
13. Is there a situation in which a person is not a long-term care insurance candidate?
If a person has limited means where his/her assets would be exhausted within a year and, thus, qualify for governmental assistance and the cost of the premium would be a burden, then long-term care insurance is really not an option.
14. Do you recommend long-term care insurance for the look-back period or a person’s lifetime?
As with question 10, it is recommended that the family coordinate their long-term planning with an elder law attorney to look at the cost benefit analysis of many courses of action. Having long-term care insurance gives the opportunity to pursue multiple planning options.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© September 2009, Post 104
Showing posts with label long-term care insurance. Show all posts
Showing posts with label long-term care insurance. Show all posts
Tuesday, September 1, 2009
Monday, March 23, 2009
New Transfer Rules and Their Effect
New Transfer Rules and Their Effect
When I commenced writing articles for my blog, I promised I would not immediately discuss the new transfer rules as it is my opinion that the basics should be understood first. This article compares the prior transfer rules to the new transfer rules in a general sense as I feel the time is appropriate to have such discussion.
However, before discussing the current rules, I will review the prior transfer rules as a comparison.
I. Transfers – Prior Law
A. Transfers within 36 months of application are scrutinized by Medicaid; may or may not give rise to a period of ineligibility.
B. Transfer Penalty = amount transferred divided by penalty rate (assume $6,525). Example: individual transfer $30,000 to daughter upon entering nursing home. Penalty is $30,000/6,525 = 4.59 months (rounded down to 4 months).
C. New Jersey Medicaid has adopted the favorable rule that penalty periods are “rounded down”. For example, if a transfer gives rise to a period of ineligibility of 4.9 months, treat it as a penalty of 4.0 months. This favorable rule has been changed by the new law as will be discussed.
D. Numerous Exemptions to the Transfer Rules – Typical exemptions are transfers to spouse, real estate to designated individuals, transfer for sole purpose other than Medicaid eligibility, transfers to disabled child or trust for disabled child, transfers to a trust for a disabled individual under age 65 (the applicant), assets transferred that are returned to the individual.
II. The New Law (Transfers)
A. Transfers – deemed to have been made on date individual would otherwise be eligible for Medicaid but for the new law. Example considers only single applicant.
1. five-year lookback.
2. individual in nursing home.
3. assets down to $2,000 (except if income exceeds the income cap of $2,022 in which case the number is $4,000).
B. Basically, transfers within 60 months treated as made when assets reduced to $2,000. That is, the penalty commences when an individual is out of funds, and has no money to pay the nursing home. Statute makes no sense in that the period of ineligibility commences when individual has no funds to pay for nursing home.
C. Major Effects of New Transfer Law
1. Individual has no funds but has obligation to pay nursing home until end of penalty period.
2. Nursing home does not receive Medicaid nor payments from individual who has exhausted his or her assets. New law creates burden on nursing home to review resident’s records prior to admission to determine any transfers within 60 months. Nursing home might face financial problems as fewer people might apply to nursing homes in light of the onerous transfer rules.
3. Families will be seeking alternative living arrangements such as day care and home care.
4. Children might have to pay for nursing home costs till end of penalty period.
5. Long-term care insurance will increase in popularity, and the typical period of coverage will increase from 36 to 60 months. In addition, individuals will be more likely to purchase long-term care insurance options such as cost of living adjustment.
6. People will be transferring assets to children at younger ages (possibly when in good health to beat the 60-month rule).
7. Hardship waivers will be sought by applicant or by nursing home on behalf of applicant. Individual could qualify for hardship waiver for Medicaid when application of transfer rules would deprive individual of medical care such that individual’s health or life would be endangered or is deprived of food, clothing or necessities of life. Nursing home could apply for waiver on behalf of individual. States have the option to pay nursing home costs for 30-day period while application is pending.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2009, Post #15
When I commenced writing articles for my blog, I promised I would not immediately discuss the new transfer rules as it is my opinion that the basics should be understood first. This article compares the prior transfer rules to the new transfer rules in a general sense as I feel the time is appropriate to have such discussion.
However, before discussing the current rules, I will review the prior transfer rules as a comparison.
I. Transfers – Prior Law
A. Transfers within 36 months of application are scrutinized by Medicaid; may or may not give rise to a period of ineligibility.
B. Transfer Penalty = amount transferred divided by penalty rate (assume $6,525). Example: individual transfer $30,000 to daughter upon entering nursing home. Penalty is $30,000/6,525 = 4.59 months (rounded down to 4 months).
C. New Jersey Medicaid has adopted the favorable rule that penalty periods are “rounded down”. For example, if a transfer gives rise to a period of ineligibility of 4.9 months, treat it as a penalty of 4.0 months. This favorable rule has been changed by the new law as will be discussed.
D. Numerous Exemptions to the Transfer Rules – Typical exemptions are transfers to spouse, real estate to designated individuals, transfer for sole purpose other than Medicaid eligibility, transfers to disabled child or trust for disabled child, transfers to a trust for a disabled individual under age 65 (the applicant), assets transferred that are returned to the individual.
II. The New Law (Transfers)
A. Transfers – deemed to have been made on date individual would otherwise be eligible for Medicaid but for the new law. Example considers only single applicant.
1. five-year lookback.
2. individual in nursing home.
3. assets down to $2,000 (except if income exceeds the income cap of $2,022 in which case the number is $4,000).
B. Basically, transfers within 60 months treated as made when assets reduced to $2,000. That is, the penalty commences when an individual is out of funds, and has no money to pay the nursing home. Statute makes no sense in that the period of ineligibility commences when individual has no funds to pay for nursing home.
C. Major Effects of New Transfer Law
1. Individual has no funds but has obligation to pay nursing home until end of penalty period.
2. Nursing home does not receive Medicaid nor payments from individual who has exhausted his or her assets. New law creates burden on nursing home to review resident’s records prior to admission to determine any transfers within 60 months. Nursing home might face financial problems as fewer people might apply to nursing homes in light of the onerous transfer rules.
3. Families will be seeking alternative living arrangements such as day care and home care.
4. Children might have to pay for nursing home costs till end of penalty period.
5. Long-term care insurance will increase in popularity, and the typical period of coverage will increase from 36 to 60 months. In addition, individuals will be more likely to purchase long-term care insurance options such as cost of living adjustment.
6. People will be transferring assets to children at younger ages (possibly when in good health to beat the 60-month rule).
7. Hardship waivers will be sought by applicant or by nursing home on behalf of applicant. Individual could qualify for hardship waiver for Medicaid when application of transfer rules would deprive individual of medical care such that individual’s health or life would be endangered or is deprived of food, clothing or necessities of life. Nursing home could apply for waiver on behalf of individual. States have the option to pay nursing home costs for 30-day period while application is pending.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2009, Post #15
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