Long Term Care Insurance

Ten Frequently Asked Questions About Long Term Care Insurance
by Richard A. Eisenberg, CLU, ChFC, CLTC

1. What is Long Term Care Insurance?
Long Term Care Insurance pays for the risks not paid for by health insurance, Medicare, and Medicare supplements.

2. Doesn't Medicaid pay for Long Term Care?
Medicaid pays for Long Term Care expenses for destitute people on welfare.

3. Can I become eligible for Medicaid?
If you are willing to give away all of your assets to your children and leave your spouse approximately $90,000, you can qualify for Medicaid.

4. If I go on Medicaid, will my Long Term Care be paid?
There is a three-year look-back period when the government checks to see if you have given away assets. If you have, some of your Long Term Care costs will not be paid.

5. Will a prenuptial agreement protect my spouse if I go on Medicaid?
No. Federal rules break prenuptial agreements and even pension plans in a spouse's name are not protected.

6. Is going on Medicaid cost effective?
Giving assets away transfers the cost basis of these assets for tax purposes. These assets, in your children's names, can disqualify your children for financial aid for your grandchildren. There also may be gift taxes due upon the transfer.

7. Why buy Long Term Care Insurance if I have enough money to pay the costs?
You buy Long Term Care Insurance for the same reasons that you buy homeowners insurance: to protect against a large risk. The odds on collecting on a Long Term Care policy are much greater than collecting on a homeowner policy.
8. Do I get my money back if I don't use the insurance?
You don't get the money back in the same way you won't get it back if your house doesn't burn down, your jewelry and art are not stolen, or your car is not wrecked.

9. Are all Long Term Care polices the same?
There are qualified and non-qualified policies. Most people buy qualified policies that comply with the Kennedy-Kassenbaum bill. There are some tax deductions and the benefits are paid tax-free. There are many provisions that are not standard on a Long Term Care Insurance policy. Some of these provisions may be important and could make it easier to collect on the policy.

10. Should I buy the cheapest policy?
At this time, there are no insurance companies that guarantee their premiums unless you pay a certain amount of premium all at once. If the price of the policy is substantially lower than most policies on the market, the chances are higher that these rates will increase over other insurance companies that priced their policies properly initially. Do no wait until it is needed to plan for your Long Term Care needs. Many options will no longer be available.

For more information on Long Term Care Insurance please
call: Richard A. Eisenberg,
CLU, ChFC 1340 Centre Street, Suite 203
Suite 203 Newton Centre,
MA 02459 617-964-4849
Fax: 617-964-7164