Long-Term Care Planning

Everyone knows a friend or family member who’s gone through the process of putting a loved one in a nursing home or other long-term care facility. It’s a stressful situation under the best of circumstances, but without proper planning, it can be emotionally and financially devastating — threatening to undo decades of hard work.

As your advocate, we can work with your family and professional advisors to put the right strategies in place — and execute those strategies when the need for long-term care arises.

Our team has years of experience helping clients and their caregivers navigate each step of the long-term care planning process — from designing strategies to helping facilitate insurance claims and applications to care facilities. Additionally, by modeling various financial projections, we help everyone involved see the effect of a long-term care stay. This leads to more informed decisions and greater comfort when the need for care arises.

Families have several options to pay for long-term care, depending on their goals, net worth, and the assets they want to use:

Self-Insurance — If your assets and retirement income are sufficient to cover long-term care costs, and preserving assets for descendants is not a priority, self-insuring may be a good option. According to Genworth’s 2018 Cost of Care Survey, the median cost of care in a semi-private nursing room is $89,297.

Long-Term Care Insurance — Traditional long-term care insurance is less popular and available than in previous years. Many people prefer so-called hybrid policies that combine long-term care coverage with life insurance or annuities. You can buy a hybrid policy by paying a one-time lump sum premium or by paying over a number of years. If it turns out long-term care is not needed, the policy works much like a traditional life insurance policy, with a death benefit paid to a beneficiary when the insured person passes away.

Asset Protection Trust — This type of trust enables Medicaid eligibility because assets placed in the trust are no longer considered owned by the Medicaid applicant.

In order to be Medicaid eligible, you must have gifted or spent down almost all of your assets, with some exceptions such as a primary residence. The trust must be irrevocable. It is not suitable for persons who need Medicaid immediately or within a short period of time. This is because gifts (to a trust or individuals) are subject to Medicaid’s five-year “look back period,” designed to prevent Medicaid applicants from giving away assets or selling them for less than fair market value to meet Medicaid’s asset limit.

Medicaid Asset Protection Trust rules tend to change frequently. They are also complicated because the rules involve federal and state laws and regulations, as well as local practice.

This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contact your insurance agent. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company. If you need more information or would like personal advice you should consult an insurance professional. You may also visit your state’s insurance department for more information.

Riders are additional guarantee options that are available to an annuity or life insurance contract holder. While some riders are part of an existing contract, many others may carry additional fees, charges and restrictions, and the policy holder should review their contract carefully before purchasing.

Fixed annuities are long-term investment vehicles designed for retirement purposes. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.

CapWealth and LPL Financial do not provide legal advice or services. Please consult your legal advisor regarding your specific situation.