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How to pay for long-term care without liquidating all your assets

If you have created estate plans, you may feel like you are ahead of the game. Planning how your affairs are managed after you are gone is important, but you also need to think about what may happen as you age. According to the AARP, after people turn 65, there is a 50-50 chance they will require long-term care. Paying for long-term care is not inexpensive. The average cost of long-term care in the U.S. is $85,800 a year, but in some states, the costs are much higher.

Massachusetts has some of the highest costs in the country. A private room in a care facility costs on average $153,500 a year. A solid estate plan should include plans to pay for these significant costs, or you may end up spending most of your assets on long-term care costs.

Long-term care insurance

Long-term care insurance used to be a popular option. With long-term care insurance, you pay an annual premium. This covers services like help bathing, dressing and eating, if you end up needing such assistance. It can also help pay for nursing home coverage.

However, over the years, this type of coverage has decreased in popularity because of increased premium costs, as well as the limited nature of many of the policies. Before you sign up for long-term care insurance, you should carefully review the policy. Some do not kick in for three months, and some only pay for certain services. This coverage can also be rather expensive.

Hybrid long-term care insurance

Hybrid long-term care insurance is whole life insurance that you draw from to pay for long-term care. Unlike other long-term care insurance, you lock in the cost of your premium when you sign up, so you avoid rate hikes. If you do not end up needing long-term care, this money is then returned to your heirs when you pass on. This too can be quite costly.

MassHealth

In Massachusetts, there is a state Medicaid program known as MassHealth. This program pays for some nursing home care, as well as home care and community-based care programs. However, it is only available to those 65 and older, that live in Massachusetts and meet the financial eligibility requirements.

The financial eligibility requirements to receive MassHealth benefits are based on your income. The state looks at:

  • Social Security income
  • Pension
  • Other nonwork-related income

This is calculated before taxes or other deductions for Medicare. If your income is too high, you may still be able to get MassHealth coverage. You will just have to meet a deductible. Your deductible will be all your income that is greater than MassHealth's income limits during a six-month period. To meet your deductible, you need medical bills that are the same or more than this amount. Then you can still qualify for MassHealth benefits.

If you have applied for MassHealth benefits and were rejected, you could still possibly qualify. You may consider reaching out to an estate planning attorney, who can appeal this decision on your behalf. An experienced estate planning attorney can also walk you through your other options for paying for long-term care and help you make the decision that makes the most sense for you and your family.

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Salem, MA 01970

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