Tuesday, November 18, 2014

Long-Term Care Insurance: Still a Good Idea

A recent study claims that there is a decreasing need for long-term care insurance, especially for single people.  I am not claiming I can contradict the study's methodology; I am not a statistician, and am not a big math person.  But from my experiences serving people's needs, long-term care insurance is always a good idea, for a few reasons.

First, many people are wealthier than they think.  When I am determining an estate for estate tax purposes, or available resources for Medicaid qualification, people are shocked at how much they have for those purposes.  I often hear "I didn't think I had that much" or "that makes me sound like a rich person."  To use the most dire Medicaid example, 401K resources are considered available to the extent you can withdraw them, even with a tax penalty.  Medicaid knows this could ruin you.  Medicaid doesen't care.

Second, applying for, and receiving, Medicaid can be an exhausting process.  Medicaid rules are a Byzantine structure of federal laws and constantly changing state regulations.  And it seems that lately, the state's response to a Medicaid application is "we are going to deny it, and see if you want to spend the money fighting us on something you clearly qualify for."

Most importantly, if you are single and have a home, that home may go the state to repay Medicaid instead of your heirs.  If you are single, you are wiping out anything you could pass on to anyone, which is a bitter pill to swallow.

There are certainly people who I advise not pick up long-term care insurance.  However, risking a long stay that takes up every penny you have is not worth the gamble when insurance is an option.

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