Category Archives: Long Term Care Insurance

Today’s blog post continues the series about buying long term care insurance as a strategy for planning ahead for long term care.  My post of May 22, 2014 discussed whether to buy long term care insurance at all.  My post of May 29, 2014 suggested looking for a stable, proven insurer.  My post of June 5, 2014 described how to identify a proven, stable Long Term Care insurance company.  My post of June 12, 2014 discussed the importance of protection against inflation. My post of June 19, 2014 suggested planning to use insurance to pay for four or five years of long term care.  My post of June 22, 2014 suggested a daily rate to choose when purchasing long term care insurance.  My post of July 10, 2014 advised to look carefully at the list of Activities of Daily Living that can trigger coverage from the long term care insurance policy.  My post of July 17, 2014 described the differences between a “period of time” kind of coverage and a “pile of money” kind of coverage.  My post of July 25, 2014 advised to make sure that the long term care insurance includes coverage for cognitive impairment.  My post of July 30, 2014 described the differences between tax-qualified and non-qualified policies.  My post of August 5, 2014 discussed the value of long term care insurance policies that qualify for the Partnership program.    My post of August 14, 2014 discussed hybrid policies that combine long term care insurance with life insurance.  My post of August 21, 2014 described how a long term care insurance policy with a return of premium rider can be used to construct a “hybrid” life insurance/long term care insurance policy.  My post of August 28, 2014 described how to use a partnership policy to protect just enough of your life savings while holding down the cost of the insurance.  My post of September 5, 2014 described how to coordinate long term care insurance with potential veterans benefits.  The introductory post in the series on planning ahead for long term care costs appeared on May 15, 2014.

Today’s post discusses how to let an elder law attorney use your long term care insurance to help protect more of your life savings than you can otherwise protect.

I believe that the long term care insurance should be used to get through the look-back period before applying for Medicaid or a period of restricted coverage “penalty period” after applying for Medicaid. That allows the insured long term care recipient to protect as many assets as possible.

An elder law attorney hired at the time a senior makes a claim against his or her long term care insurance can make sure that the assets are transferred to people and/or trusts that will not be considered by Medicaid as under the control of the senior. The attorney can also determine whether it is more valuable to use the insurance to get through a look back period (currently 5 years) or get through the penalty period that Medicaid imposes when an applicant gives money away.  (The choice of the look back period or the penalty period is a case-by-case decision depending on the value of the insurance policy, the applicant’s current costs, and the applicant’s income.)  In addition, the elder law attorney can represent the applicant before the state’s Medicaid office to adequately explain why the transferred assets are okay.

The elder law attorney can use his or her experience to make the most of the senior’s long term care insurance, available assets, and income to find the most valuable strategy for the client.

For more information, visit Jim’s website.

Jim Koewler’s mission is
“Protecting Seniors and People with Special Needs.”

For help with long term care or with planning for someone with special needs,
call Jim, or contact him through his website.

© 2014 The Koewler Law Firm.  All rights reserved.

Today’s blog post continues the series about buying long term care insurance as a strategy for planning ahead for long term care.  My post of May 22, 2014 discussed whether to buy long term care insurance at all.  My post of May 29, 2014 suggested looking for a stable, proven insurer.  My post of June 5, 2014 described how to identify a proven, stable Long Term Care insurance company.  My post of June 12, 2014 discussed the importance of protection against inflation. My post of June 19, 2014 suggested planning to use insurance to pay for four or five years of long term care.  My post of June 22, 2014 suggested a daily rate to choose when purchasing long term care insurance.  My post of July 10, 2014 advised to look carefully at the list of Activities of Daily Living that can trigger coverage from the long term care insurance policy.  My post of July 17, 2014 described the differences between a “period of time” kind of coverage and a “pile of money” kind of coverage.  My post of July 25, 2014 advised to make sure that the long term care insurance includes coverage for cognitive impairment.  My post of July 30, 2014 described the differences between tax-qualified and non-qualified policies.  My post of August 5, 2014 discussed the value of long term care insurance policies that qualify for the Partnership program.    My post of August 14, 2014 discussed hybrid policies that combine long term care insurance with life insurance.  My post of August 21, 2014 described how a long term care insurance policy with a return of premium rider can be used to construct a “hybrid” life insurance/long term care insurance policy.  The introductory post in the series on planning ahead for long term care costs appeared on May 15, 2014.

Today’s post discusses how much long term care insurance to buy as it relates to the size of your life savings.

As discussed in my post of August 5, 2014, a Partnership long term care insurance policy allows the policyholder to keep an amount of money equal to the payout from the insurance.  For example, Medicaid normally allows a person receiving long term care benefits to have only $1,500 in assets.   A person whose Partnership long term care policy paid $100,000 before the person used Medicaid benefits would be allowed to keep $101,500 and still receive Medicaid coverage.

That ability to keep an amount of money equal to the insurance payout suggests a possible strategy to buy long term care insurance at a manageable cost to protect smaller nest eggs.  A person who knows (or can predict) how large his or her life savings is (or will be) can buy a Partnership policy for just that amount.

If someone wanted to buy a long term care policy to cover 5 years (today’s look-back period) at a common nursing home private pay rate in northeast Ohio (where I practice,) the policy would need to have an expected payout of about $450,000 over 5 years.  (This calculation assumes that the insured has no income that he or she will contribute to the cost of care, an unlikely assumption.)  For people who expect that their life savings will be smaller than $450,000, a lower-priced insurance alternative may be available.

Say, for example, that your life savings is $250,000.  A Partnership long term care policy with a projected payout of $250,000 would allow the entire savings amount to be kept when your insurance runs out and you need Medicaid to pay for your long term care.  A policy structured to pay out $250,000 should cost significantly less than one structured to pay out $450,000.  This approach to long term care insurance can be used for any size of nest egg below $450,000.

Now, this strategy is not appropriate for everyone.  For example, the younger you are when purchasing the long term care policy, the less likely you are to be able to predict the value of your savings at retirement time.  Similarly, people invested in assets which fluctuate in value (such as stocks and real estate) may not be able to predict the value of their savings at the time they’d need long term care.

For others, however, this strategy would make long term care insurance much more affordable and would give them insurance that could cover their entire life savings) or to cover a specific amount of their savings that they choose to protect.)

Not long ago, I met with a healthy, retired widow whose husband died after a long bout with Alzheimer’s disease.  After that experience, she is concerned that her possible future need for long term care might bankrupt her.  (“Bankrupt” was her word.)  She knows how much her life savings is worth (and it’s less than $450,000.)  She could, at a manageable price, get a Partnership policy that would cover her entire life savings.

For more information, visit Jim’s website.

Jim Koewler’s mission is
“Protecting Seniors and People with Special Needs.”

For help with long term care or with planning for someone with special needs,
call Jim, or contact him through his website.

© 2014 The Koewler Law Firm.  All rights reserved.

Today’s blog post continues the series about buying long term care insurance as a strategy for planning ahead for long term care.  My post of May 22, 2014 discussed whether to buy long term care insurance at all.  My post of May 29, 2014 suggested looking for a stable, proven insurer.  My post of June 5, 2014 described how to identify a proven, stable Long Term Care insurance company.  My post of June 12, 2014 discussed the importance of protection against inflation. My post of June 19, 2014 suggested planning to use insurance to pay for four or five years of long term care.  My post of June 22, 2014 suggested a daily rate to choose when purchasing long term care insurance.  My post of July 10, 2014 advised to look carefully at the list of Activities of Daily Living that can trigger coverage from the long term care insurance policy.  My post of July 17, 2014 described the differences between a “period of time” kind of coverage and a “pile of money” kind of coverage.  My post of July 25, 2014 advised to make sure that the long term care insurance includes coverage for cognitive impairment.  My post of July 30, 2014 described the differences between tax-qualified and non-qualified policies.  My post of August 5, 2014 discussed the value of long term care insurance policies that qualify for the Partnership program.    My post of August 14, 2014 discussed hybrid policies that combine long term care insurance with life insurance.  The introductory post in the series on planning ahead for long term care costs appeared on May 15, 2014.

Today’s post discusses how a return of premium rider on a long term care insurance policy acts like life insurance to make the policy provide “hybrid” life/long term care coverage.

A “return of premium” feature in a long term care policy means that, if the insured never needs long term care, the policy will pay to the insured’s estate an amount of money equal to the premiums that the insured paid over the life of the policy.  (The premium returned will probably not include any interest on the money, so there will be no growth in the investment.)  In effect, this return of premium acts like a life insurance policy.  Money is paid to the heirs or estate of the insured upon the insured’s death.

If you want long term care insurance but worry that your premiums will be “wasted” if you never need long term care, a return of premium is a way to construct your own “hybrid” long term care/life insurance policy.

For more information, visit Jim’s website.

Jim Koewler’s mission is
“Protecting Seniors and People with Special Needs.”

For help with long term care or with planning for someone with special needs,
call Jim, or contact him through his website.

© 2014 The Koewler Law Firm.  All rights reserved.

Today’s blog post continues the series about buying long term care insurance as a strategy for planning ahead for long term care.  My post of May 22, 2014 discussed whether to buy long term care insurance at all.  My post of May 29, 2014 suggested looking for a stable, proven insurer.  My post of June 5, 2014 described how to identify a proven, stable Long Term Care insurance company.  My post of June 12, 2014 discussed the importance of protection against inflation. My post of June 19, 2014 suggested planning to use insurance to pay for four or five years of long term care.  My post of June 22, 2014 suggested a daily rate to choose when purchasing long term care insurance.  My post of July 10, 2014 advised to look carefully at the list of Activities of Daily Living that can trigger coverage from the long term care insurance policy.  My post of July 17, 2014 described the differences between a “period of time” kind of coverage and a “pile of money” kind of coverage.  My post of July 25, 2014 advised to make sure that the long term care insurance includes coverage for cognitive impairment.  My post of July 30, 2014 described the differences between tax-qualified and non-qualified policies.  My post of August 5, 2014 discussed the value of long term care insurance policies that qualify for the Partnership program.    The introductory post in the series on planning ahead for long term care costs appeared on May 15, 2014.

Today’s post discusses insurance policies that combine long term care insurance coverage and life insurance coverage.

Some insurers offer a hybrid insurance product that provides long term care coverage and life coverage on the same policy.  If the insured person needs long term care at some point, this hybrid policy will pay out to cover those long term care costs.  If, though, the insured never needs long term care, the policy pays out upon the insured’s death as a life insurance policy.

Some potential buyers of such a product might wish that the death benefit wasn’t lost by use of the long term care benefit.  What those potential buyers don’t realize is that the costs of long term care routinely use up life insurance policies (at least cash value policies, such as whole life, universal life, etc.)  The cash values or surrender values of these cash value life insurance policies are considered available resources to pay for long term care, so these policies’ value is routinely used up by long term care costs.  As a result, hybrid life/long term care policies suffer the same loss of death benefit as “regular” life insurance policies when the insured needs long term care, but, at least, the hybrid policy had provided long term care insurance that allows the insured to protect his or her other assets (as described in my My post of June 19, 2014 that suggested insuring for a four year or a five year stay in a nursing home.)

For more information, visit Jim’s website.

Jim Koewler’s mission is
“Protecting Seniors and People with Special Needs.”

For help with long term care or with planning for someone with special needs,
call Jim, or contact him through his website.

© 2014 The Koewler Law Firm.  All rights reserved.

Today’s blog post continues the series about buying long term care insurance as a strategy for planning ahead for long term care.  My post of May 22, 2014 discussed whether to buy long term care insurance at all.  My post of May 29, 2014 suggested looking for a stable, proven insurer.  My post of June 5, 2014 described how to identify a proven, stable Long Term Care insurance company.  My post of June 12, 2014 discussed the importance of protection against inflation. My post of June 19, 2014 suggested planning to use insurance to pay for four or five years of long term care.  My post of June 22, 2014 suggested a daily rate to choose when purchasing long term care insurance.  My post of July 10, 2014 advised to look carefully at the list of Activities of Daily Living that can trigger coverage from the long term care insurance policy.  My post of July 17, 2014 described the differences between a “period of time” kind of coverage and a “pile of money” kind of coverage.  My post of July 25, 2014 advised to make sure that the long term care insurance includes coverage for cognitive impairment.  My post of July 30, 2014 described the differences between tax-qualified and non-qualified policies.  The introductory post in the series on planning ahead for long term care costs appeared on May 15, 2014.

Today’s post will discuss whether to consider a long term care insurance policy that fits within the Partnership program.

To discuss what a Partnership Policy gives the insured, we must first discuss what Ohio’s Medicaid program allows a long term care recipient to keep.  Generally, a person receiving Medicaid in Ohio to cover his or her long term care costs can have no more than $1,500 in assets.  (Remember, Medicaid is a program to provide health care to the poor, so one must be poor to qualify.)  A Medicaid applicant who has long term care insurance that is not on a Partnership Policy can have no more than this $1,500 amount in assets when he or she wants Medicaid benefits to start.

A Medicaid applicant who has long term care insurance on a Partnership Policy can keep $1,500 PLUS the amount that the policy has paid out.  So, for example, if a senior receiving long term care has a Partnership Policy that paid out $100,000, the senior could (after the policy ran out) apply for Medicaid and keep $101,500.  The $100,000 “extra” that the senior can keep is even exempt from the estate recovery program (the part of the Medicaid law that allows the state to try to get assets from the deceased Medicaid recipient’s estate to recover some of the Medicaid program’s costs.)

In addition, Partnership Policies have mandatory inflation protection for all applicants 75 years of age or younger.  (So, if you get  a Partnership Policy, you will automatically have followed the suggestion in my post of June 12, 2014.)

Now, despite the advantages of a Partnership Policy in allowing the policy holder to keep more of his or her assets and in having built-in protection against inflation, a Partnership Policy may not be appropriate for every applicant.  I like Partnership Policies, but the devil is in the details.  Look over the policy limitations of Partnership Policies and “regular” policies before buying.

The biggest difference could be in how policy payments are triggered.  At least initially, Partnership Policies require that the policy holder be unable to perform 2 or more Activities of Daily Living before the policy will pay for care (like the tax-qualified policies discussed in my post of July 30, 2014.)  Some non-Partnership Policies use a simpler test of having your doctor determine that long term care is needed.  Before choosing your long term care policy, you must decide what level of need you’re willing to suffer before the policy will pay out.

(If you choose a policy, Partnership or otherwise, that uses the inability to carry out Activities of Daily Living as its trigger, make sure that bathing is one of the listed activities, as mentioned in my post of July 10, 2014.)

For more information, visit Jim’s website.

Jim Koewler’s mission is
“Protecting Seniors and People with Special Needs.”

For help with long term care or with planning for someone with special needs,
call Jim, or contact him through his website.

© 2014 The Koewler Law Firm.  All rights reserved.

Today’s blog post continues the series about buying long term care insurance as a strategy for planning ahead for long term care.  My post of May 22, 2014 discussed whether to buy long term care insurance at all.  My post of May 29, 2014 suggested looking for a stable, proven insurer.  My post of June 5, 2014 described how to identify a proven, stable Long Term Care insurance company.  My post of June 12, 2014 discussed the importance of protection against inflation. My post of June 19, 2014 suggested planning to use insurance to pay for four or five years of long term care.  My post of June 22, 2014 suggested a daily rate to choose when purchasing long term care insurance.  My post of July 10, 2014 advised to look carefully at the list of Activities of Daily Living that can trigger coverage from the long term care insurance policy.  My post of July 17, 2014 described the differences between a “period of time” kind of coverage and a “pile of money” kind of coverage.  My post of July 25, 2014 advised to make sure that the long term care insurance includes coverage for cognitive impairment.  The introductory post in the series on planning ahead for long term care costs appeared on May 15, 2014.

Today’s post will discuss whether to buy a tax-qualified long term care insurance policy or a non-tax-qualified long term care insurance policy.

A tax-qualified policy has, as the label implies, certain tax advantages over non-tax-qualified policies.  Premiums, or a portion of the premiums, for a tax-qualified policy can be deducted from the taxes of the policy holder if the taxpayer’s medical expenses (including the deductible amount of the long term care insurance premium) exceed the threshold amount for tax-deductibility.  (Tax deductibility of health care costs may be different now that the Affordable Care Act has gone into effect.)   The amount of premium that can be counted toward medical expenses goes up with age.

For the self-employed, however, the premiums for a long term care policy may be deductible without regard to the type of policy.  In fact, the premiums may be deductible for the self-employed and his or her spouse as well.  (This is more a tax planning issue than a long term care insurance issue.  Please consult your tax advisor for details and proper planning.)

Likewise, the benefits paid out from a tax-qualified policy are not countable as income.  It is not clear, however, that the benefits from a non-tax-qualified policy are taxable.  The law that created tax-qualified policies (HIPAA) states that tax-qualified policy benefits are not taxable as income, but the law is silent about non-tax-qualified policies.

Whether policy benefits are counted as income may not matter, however.  If you buy long term care insurance to cover the “look back” period before qualifying for Medicaid, as suggested in my post of June 19, 2014, your giving assets to your friends and family (to protect those assets from long term care costs) should leave you with income (including the insurance proceeds) that is low enough not to worry about taxation (especially after deducting medical costs.)

There is a significant difference between the triggers for tax-qualified and non-tax-qualified policies.  (The policy trigger is the event or combination of events that causes the policy to start paying benefits.)

Tax-qualified policies must pay when the policy holder cannot perform two or more Activities of Daily Living.  Activities of Daily Living include going to the bathroom, bathing, getting in and out of bed or a chair, and other similar actions.  (Activities of Daily Living are discussed in my post of July 10, 2014.)  Tax-qualified policies must also pay if the policy holder has a cognitive impairment (such as dementia) that endangers the policy holder or others.  (Cognitive impairment coverage is discussed in my post of July 25, 2014.)

Non-tax-qualified policies may start paying benefits when the policy holder is unable to perform only one Activity of Daily Living or has a cognitive impairment that endangers the policy holder or others.  In addition, the Activities of Daily Living list for a non-tax-qualified policy may include walking, which is not generally included on tax-qualified policies.  In fact, some non-tax-qualified policies are triggered when the policy holder’s doctor determines that long-term care is needed (and do not set out any limits on how the doctor makes such a determination.)

(Note:  As mentioned in my post of July 10, 2014, make sure that bathing is one of the listed Activities of Daily Living.)

For more information, visit Jim’s website.

Jim Koewler’s mission is
“Protecting Seniors and People with Special Needs.”

For help with long term care or with planning for someone with special needs,
call Jim, or contact him through his website.

© 2014 The Koewler Law Firm.  All rights reserved.

Today’s blog post continues the series about buying long term care insurance as a strategy for planning ahead for long term care.  My post of May 22, 2014 discussed whether to buy long term care insurance at all.  My post of May 29, 2014 suggested looking for a stable, proven insurer.  My post of June 5, 2014 described how to identify a proven, stable Long Term Care insurance company.  My post of June 12, 2014 discussed the importance of protection against inflation. My post of June 19, 2014 suggested planning to use insurance to pay for four or five years of long term care.  My post of June 22, 2014 suggested a daily rate to choose when purchasing long term care insurance.  My post of July 10, 2014 advised to look carefully at the list of Activities of Daily Living that can trigger coverage from the long term care insurance policy.  My post of July 17, 2014 described the differences between a “period of time” kind of coverage and a “pile of money” kind of coverage.  The introductory post in the series on planning ahead for long term care costs appeared on May 15, 2014.

Today’s post will discuss Cognitive Impairment coverage.

More and more seniors who need long term care need it because of Alzheimer’s disease or some other form of dementia.  It would be terrible to find out when you need long term care that your long term care insurance doesn’t cover non-physical ailments.

Remember, insurance companies will pay out on policies when the policy terms require payment.  The policy is a contract, and insurance companies will honor their contracts.  (Undoubtedly, some will be more cooperative than others.)  At the same time, insurance companies won’t (and shouldn’t) pay out for claims that aren’t within the contract.  As a result, you can’t assume that every long term care insurance policy that you consider will cover long term care costs no matter the reason that the insured needs care.

Before buying coverage, make sure that the policy covers long term care costs associated with cognitive impairment.

For more information, visit Jim’s website.

Jim Koewler’s mission is
“Protecting Seniors and People with Special Needs.”

For help with long term care or with planning for someone with special needs,
call Jim, or contact him through his website.

© 2014 The Koewler Law Firm.  All rights reserved.