New York Estate Planning & Elder Law Blog
A DEPLETED INSURANCE MARKET
Many of us will likely find a need at some point with help for basic living functions due to infirmity, recovery from a catastrophic accident or simply from aging itself. Things such as bathing, cooking, taking medicine are all necessities that need to be addressed. These needs are currently being largely addressed through long term care services and support in nursing homes and community and home based programs. It is estimated that over half of all elderly Americans will need to rely on these long term care services and support. Long term care services and support is generally not considered medical care but rather assistance with everyday functional needs. Medicare does not pay for such long term care services and support although Medicaid does. Since Medicaid is a means based program, an individual must dwindle down his/her financial resources to obtain such benefits. Given the large number of aging Americans Health Affairs Journal published a detailed study of the viability of insurance to cover this medical necessity. Many individuals prefer not to think about the need for such eventualities, which only compounds the problem with financing such a service, since such needs are rarely prepared for. Not surprisingly, such a product would likely only be affordable to upper middle class individuals. The need for such an insurance product is important and growing in size.
COSTS INVOLVED
Medicare will only pay for long term care services and support under very limited circumstances. Even when it does, it does not pay for the entirety of those services. Medicare covers medically necessary services, not the assistance that long term care services and support provides to individuals. Depending on the level of care involved, insurance giant Genworth reports that long term care services and supports can run from an average of $87,600 annually if provided in a nursing home to $45,800 if provided in a community setting. In many New York locales, the cost is more than double the national average. Therefore, most such services are out of financial reach of most upper middle class income families. The average cost of a long term care insurance care policy in 2011 was $2,283, or slightly less than $200 a month. Not surprisingly the number of current enrollees in such policies has decreased despite the general wisdom and need for such products. At the same time the number of insurance carriers is dwindling.
TYPES OF POLICIES FOR LONG TERM CARE INSURANCE AND LONG TERM CARE PARTNERSHIP PLAN
The common long term care insurance policy requires that the policy holder be under 70 years old and depending on the exact level of coverage purchased may not be eligible for coverage for up to two years. A hybrid insurance policy that would provide funding for long term care services and support is called the Long Term Care Partnership Program. This type of policy is not available in every state although it is in New York. Depending on the specifics of the policy, the holder can hold on to a certain specified amount of assets that are non-countable towards Medicaid eligibility. For example, if you purchase a policy for $250,000 and need to have long term care services and support, you can apply for Medicaid and have up $250,000 in non-countable assets. If you just retired and only have so much set aside, you need to protect it. If you or your spouse need long term care services but have no insurance you must spend most of your savings before Medicaid will pay.