With 10,000 baby boomers turning 65 every month in the US, many of them are planning to leave an inheritance for their family. Most people have no idea of the cost and repercussions of their health changing affects an inheritance.
Health will change, and we generally do not get healthier as we age. We slow down, blood pressure and cholesterol go up, falling down happens, the number of medications go up, etc.
At some point we need help with day to day activities, or we become cognitively impaired (which happens to a LOT of us). Will we rely on our family to provide the care we need? Let’s look at that possibility.
Our children are probably employed and need to be to pay their mortgage, raise their family, and save for their retirement. How many of us have children that can quit work and move in to care for us?
What if we pay them, to compensate for their loss of employment income? This is being done more and more today. Most who do this do not realize that when the time comes when they simply cannot handle the cares anymore, and facility care is required, will there be enough money left to cover the costs?
But, Medicaid is available for that purpose you say. Maybe not – unless you had a signed, dated and notarized employment contract spelling out exactly what cares are being provided, for what cost, and scheduled, Medicaid will count every single payment as a gift. Every gift you made in the past 5 years is found, totaled, and Medicaid determines how long those dollars could have paid for your care once you are officially impoverished (broke).
Do you have an asset that you would like to pass down to the family? A business, a farm, real estate? You can keep only $2000 of assets and must cash in life insurance to receive Medicaid. If married, the spouse at home can keep a house, car, and some savings, but this all goes back to Medicaid at last death, not your family.
It can be a lot less expensive to purchase Long Term Care (LTC) insurance while in your 50’s and still healthy than to find yourself with no options but to liquidate everything. Actually, it makes sense for the adult children to purchase this insurance on their parents. It will give the folks choice of where they want to be cared for (LTC facilities lose money on Medicaid reimbursement and can discriminate). It also protects parent’s assets which can be inherited by the children, assuming parents still like their children.
No responsible person drives without car insurance or owns a home without homeowners insurance. LTC happens to 70% of people who reach age 65 per HHS. Which of these 3 is the bigger risk? Are you a gambler? Do you feel lucky today?
For more information on planning for, or dealing with care currently needed, contact www.TheLongTermCareGuy.com. We have answers for most any situation and we are here to help you.