You Need LTC, But Did Not Buy Insurance – What Can Be Done?

You thought (hoped, actually)  that you would never need Long Term Care.  If it did happen you figured perhaps your family would take care of you.  Neither of those thoughts panned out and now you are facing a very expensive long term bill.  What can you do?

Fortunately, there are strategies that can help in this situation.  If you have a significant nest egg and are earning a good rate of interest on those investments, perhaps the interest and current income will cover the cost.  Bear in mind that when care is needed, there may be less need for multiple vehicles, toys, entertainment, trips to Branson, etc.

If this is not your situation then perhaps there might be a way to make the funds you do have last longer or for life.  One way to do this is with a medically underwritten immediate annuity.  Typically, when a life income annuity is purchased, a large sum is exchanged for a monthly check that will come until the day you die.  The older you are, the less years the annuity company predicts they will be making those payments and the larger the monthly check you receive from a fixed sum submitted.  Thus older people (and men due to shorter life expectancies) receive a significantly larger payout from the same sum than a younger person (or female) would.

One annuity company takes health into consideration in their calculations.  If you need  Long Term Care, you are probably not as healthy as the “average: person of your chronological age.  You probably have a much shorter life expectancy as well.  By underwriting for health – taking a shorter life expectancy into consideration – this can be a solution to help you pay for Long Term Care and never run out of money.   If you have $300,000 of non-qualified assets, and for about half of that I can get you the needed cash flow to pay for your Long Term Care needs for life, then the remainder is left for family.  If your needs increase, and an expensive nursing home is necessary, you will be older and in worse health, making a second life income even less expensive than the initial one.

If you have no liquid, non-qualified funds for this strategy, but own a house, then a reverse mortgage may be used to produce the cash for this strategy.  Imagine withdrawing cash from “bank of house” and converting those funds into a life income that keeps you at home instead of spending down, selling the home, and ending up on Medicaid in a nursing home.

If you own a life insurance policy, even a term policy, it is possible to sell it on the secondary market and receive a significant cash sum that can also be used to fund your Long Term Care.

If you are spending down to Medicaid impoverishment it is still possible to protect some of your funds.  While Medicaid requires life insurance policies over about $1500 of death benefit to be cashed in, you can set aside up to $15,000 (varies by state) in an irrevocable burial trust.  This money is not considered a divestment by Medicaid, and is immediately available at death (wire transfer) to pay for final expenses.  Life insurance policies can take several weeks to collect on and often the funeral home requires a several thousand dollar deposit on somebody’s credit card.  Family is in control and spends as much or as little as desired with the remainder being refunded to the estate of the deceased.

In many locales it is also possible for a parent to fund irrevocable burial trusts for children and spouses of – and still not be a divestment for Medicaid purposes.  This can be done while in a Long Term Care facility, it is not too late until the money is all gone.

If you are an agent with elderly clients who may need such advice or assistance or are a consumer looking for solutions to a difficult situation, call me, Romeo Raabe at (902) 884-3030 or (800) 219-9203 and lets see what can be done.

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