Long-term care insurance (LTC) isn’t for everyone. Not only is it expensive and sometimes hard to qualify for, but there’s no guarantee you’ll ever use the benefits. But if you decide not to buy LTC, what are your alternatives?
You Saved for a Rainy Day—It’s Here
Should the need arise, you could use your personal savings to pay for long-term care (self-insurance). If you choose this option, you’ll have to estimate how much money you might need to cover long-term care expenses and start an appropriate savings plan. And though there’s a good chance that the amount you’ll have to put aside each month to cover future medical expenses will equal (or exceed) what you’d pay in LTC premiums, buying LTC is not an option in some cases (e.g., if a pre-existing condition prevents you from qualifying for coverage). Keep in mind, however, that if you do choose to self-insure, there’s always the chance that your savings won’t be enough to cover your actual long-term care expenses.
Did you hear? Medicaid Pays for Long-Term Care
Medicaid is a government-sponsored program that pays for medical treatment. People with low incomes who are elderly, disabled, or blind may be eligible if they meet the financial and medical requirements. These eligibility decisions are primarily based on:
- Income
- Net worth
- Need for nursing or custodial care
In most states, Medicaid subsidizes care in nursing facilities and at home (for those who meet Medicaid guidelines). Unfortunately, meeting Medicaid’s financial requirements is difficult. Many people are forced to exhaust their life savings to qualify for Medicaid. A comprehensive LTC policy may prevent this from happening.
Life Insurance—It’s Not Just for Estate Planning Anymore
If you have a cash value life insurance policy, familiarize yourself with the rules on policy loans and cash withdrawals. Most policies allow you to access your cash value in one of these ways, but the amounts may be limited, and there may be interest and tax consequences. Also, find out if your policy allows you to use part of the death benefit for medical expenses or long-term care while you are alive. (Policies with an accelerated benefits rider typically allow this.) Should you become terminally ill, you may also have the option to sell your life insurance policy to a viatical settlement funding company and use the money to pay for your care. You will typically get 40 to 85 percent of the policy’s face value from a viatical settlement.
Get Paid to Live in Your Home
If you own your home outright or have a lot of equity in your home, you could consider a reverse mortgage. Basically, a reverse mortgage gives the lender a lien (or mortgage) on your home, and you receive either a lump sum or prearranged monthly payments. You typically don’t have to repay the loan as long as you live in the home. However, if you move or if the house is sold, the loan must be repaid out of the proceeds of the sale. A reverse mortgage can be an easy source of cash, but it could also complicate matters if you plan on leaving your home to your heirs.
If you have questions, contact the Experts at Henssler Financial:experts@henssler.com or 770-429-9166.
Disclosures
The following information is reprinted with permission from Forefield, a division of Broadridge Financial Solutions, Inc. This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
