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The Long-Term-Care Puzzle Gets Tougher
( Page 2 of 3 )
May 2006
Jeffrey Marshall, a lawyer in Williamsport, Pa.,
raises another possibility. He predicts that in some
of the 30 states with filial-responsibility laws, the
children could be liable for their parents’ bills. To
avoid personal liability, family members should be
careful when signing nursing-home admission agreements..
For example, Marshall says, if a parent can’t
sign the paperwork, the adult child should only sign
as a representative of the resident, using words such
as power of attorney or agent after the signature.
The following are some options to finance longterm
care under the new law. But Medicaid regulations
are tricky, rules differ from state to state, and
each option has its pitfalls. Seek legal advice first.
Buy long-term-care insurance. Perhaps the best way
to protect your nest egg is to purchase long-term-care
insurance. You can lower premiums if you buy it in
your fifties, but even if you’re 70, you can get a
decent deal if you’re in good health, says Jesse Slome,
executive director of the American Association for
Long-Term Care Insurance, a brokers group.
For instance, he says, a 70-year-old man living
in California could pay $2,073 in annual premiums
for a policy with a 90-day waiting period, a $100
daily benefit, inflation protection and three years
of care. If you live in a high-cost city, consider a
higher daily benefit: A $180 benefit would cost that
70-year-old an annual premium of $3,732.
Ask your agent for preferred health discounts,
Slome suggests. Nearly 19% of applicants in their
seventies and 32% in their sixties qualified for discounts
in 2005, according to the association. If you’re
married, consider a shared-care policy: You buy a single
policy, perhaps for a total of six years, and either
spouse can draw on the pool.
If you live in one of four states that offer “partnership”
long-term-care policies, you can potentially
protect additional assets. California, Connecticut,
Indiana and New York offer partial protection of
assets in the event that buyers exhaust their benefits
and must turn to Medicaid. Let’s say you bought a
three-year policy that paid $150,000 in coverage; if
you needed more care, you could protect an equivalent
amount of assets and still qualify for Medicaid.
The new federal law allows other states to offer partnership
programs, but it could take at least a year
before such policies are available.
Tap your home equity. If you live alone, you’re
required under the new law to pay for care if your
home has equity in excess of $500,000; states can
raise the limit to $750,000. Under the old law, a single
person could be eligible for Medicaid no matter
how much equity was in the house. Married couples
are still exempt from the ceiling if one spouse
remains in the house, and Medicaid can recover the
cost of any nursing-home care from the sale of the
house once both spouses die.
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