Worcester & Middlesex County Estate Planning & Elder Law

What Are the Medicare Basics?

Here are the vital parts of Medicare, the costs, the eligibility rules, and the consequence of missing the enrollment deadline.

Medicare was enacted in July 1965 as part of Title XVIII of the Social Security Act.

Think Advisor’s article, "Essential Medicare Facts & Penalties Advisors Should Know on One Page," says that 53 years later, Medicare has four parts. They are Part A: Hospital, Part B: Outpatient Services, Part C: Medicare Replacement, and Part D: Prescription Drugs.

As a general rule, if you are 65 and you or your spouse have paid Medicare taxes for at least 10 years, you may enroll in the program. Those under 65 may also enroll if they are disabled or have end-stage renal disease.

Let’s look at the different parts of Medicare:

Part A is free for most people. If you didn’t pay Medicare taxes, you may be able to enroll and pay for Part A. If you’re under 65 and didn’t pay into Medicare, you may be eligible if you have been entitled to Social Security or Railroad Retirement Board disability benefits for 24 months or you are a kidney dialysis or kidney transplant patient.

Everyone is required to pay a premium for Medicare Part B, which is deducted from your Social Security retirement payment. If you’re eligible but haven’t yet begun to receive a Social Security retirement benefit, Medicare will send you a bill.

Part C is also known as a Medicare Advantage plan. It’s issued by a Medicare-approved private insurer. Even if you choose Medicare Part C, you still are required to pay a Part B premium. Although these plans cover all services in Part A and Part B, they frequently have other benefits like vision, dental, hearing, and prescription drugs.

Part D covers prescription drugs. Each Medicare drug plan lists its approved drugs and a “tier” for them. A lower-tier drug will generally cost less, and a higher-tier drug will cost more.

The window to enroll in Medicare starts on the first day of the third month prior to your birth month and ends on the last day of the third month following the month of your birth.

In addition, there’s a separate “late-enrollment” penalty for Part B and Part D.

Reference: Think Advisor (July 31, 2018) "Essential Medicare Facts & Penalties Advisors Should Know on One Page"

Ready to enroll in Medicare and need help sorting it all out? Give us a call at (978) 342-1914 or visit us at www.dellamonaca.com.

Do You Know What’s NOT Covered by Medicare?

It's important to understand that Medicare Part A and Part B leave some pretty significant gaps in your healthcare coverage.

Medicare Parts A and B cover a big part of your medical expenses when you turn 65. Part A is your hospital insurance that helps pay for inpatient hospital stays, stays in skilled nursing facilities, surgery, hospice care, and certain home healthcare. Part B is your medical insurance. It will help pay for doctors' visits, outpatient care, some preventive services, and some medical equipment and supplies. Most people can sign up for Medicare three months before the month they turn 65.

However, Kiplinger’s recent article, "7 Things Medicare Doesn't Cover," gives us a closer look at what isn't covered by Medicare, as well as some information on supplemental insurance policies and strategies that can help cover the extra costs. That way, you won't wind up with unanticipated medical expenses in retirement.

Prescription drugs: Medicare doesn’t provide coverage for outpatient prescription drugs. However, you can purchase a Part D prescription-drug policy or a Medicare Advantage plan that covers both medical and drug costs. You can get Part D or Medicare Advantage coverage when you enroll in Medicare or when you lose other drug coverage, and you can change policies during open enrollment season each fall.

Long-term care: One of the biggest potential expenses in retirement is the cost of long-term care. Medicare provides coverage for some skilled nursing services, but not for custodial care. That’s help with bathing, dressing, and other daily living activities. However, you can buy long-term-care insurance or a combination long-term-care and life insurance policy to cover these costs. The earlier in life you make this purchase, the better.

Deductibles and copays: You’re responsible for deductibles and copayments on Medicare Part A hospital stays and Part B doctors’ services and outpatient care. This year, you’ll have to pay a Part A deductible of $1,340 before coverage starts, and you’ll also have to pay a portion of the cost of long hospital stays, which is $335 per day for days 61-90 in the hospital, and $670 per day after that. Note that over your lifetime, Medicare will only help pay for a total of 60 days beyond the 90-day limit—known as “lifetime reserve days”—and after that, you’ll pay the entire hospital cost.

Part B typically covers 80 percent of doctors’ services, lab tests, and x-rays, but you’ll have to pay 20 percent of the costs after a $183 deductible in 2018. A Medigap (Medicare supplement) policy or Medicare Advantage plan can close the gaps if you don’t have the supplemental coverage from a retiree health insurance policy. If you buy a Medigap policy within six months of signing up for Medicare Part B, then insurers can’t reject you or charge more because of preexisting conditions.

The majority of dental care: Medicare doesn’t provide coverage for routine dental visits, teeth cleanings, fillings, dentures, or most tooth extractions. Some Medicare Advantage plans cover basic cleanings and x-rays, but they usually have an annual coverage cap of about $1,500. You could also get coverage from a separate dental insurance policy or a dental discount plan.

Basic vision care: Medicare also generally doesn’t cover routine eye exams or glasses (except for an annual eye exam if you have diabetes or eyeglasses after having certain kinds of cataract surgery). However, some Medicare Advantage plans provide vision coverage, or you may be able to buy a separate supplemental policy that provides vision care alone or includes both dental and vision care.

Hearing aids: Medicare doesn’t cover routine hearing exams or hearing aids, but some Medicare Advantage plans cover hearing aids and fitting exams. Some discount programs also provide lower-cost hearing aids. If you save money in an HSA before you enroll in Medicare, you can also use that tax-free for hearing aids and other out-of-pocket expenses.

Medical care overseas: Finally, Medicare usually doesn’t cover care you receive while traveling outside of the U.S.,  except for very limited circumstances (like when you’re on a cruise ship within six hours of a U.S. port). However, Medigap plans C through G, M, and N cover 80 percent of the cost of emergency care abroad, with a lifetime limit of $50,000. Some Medicare Advantage plans cover emergency care abroad. You could also purchase a travel insurance policy that covers some medical expenses, while you’re outside of the U.S. and may even cover emergency medical evacuation.

Reference: Kiplinger (May 23, 2018) "7 Things Medicare Doesn't Cover"

Need help sorting it all out? Give us a call at (978) 342-1914 or visit us at www.dellamonaca.com.

How Do I Maximize My HSA for Retirement?

Aging creates unique circumstances for those with health savings accounts (HSA). Generally, the impact of approaching age 65 is to limit the ability to contribute to your HSA.

While hitting 65 can limit HSA contributions, there are some ways to squeeze every dollar into your HSA even as you approach retirement age.

A recent healthsavings.com article, "Approaching Retirement? Five Tips to Maximize Your Investment HSA," explains it’s pretty clear healthcare costs in retirement will be one of the eight largest expenses. Fidelity estimates that the average couple will need $275,000 in today’s dollars to cover healthcare expenses throughout retirement. However, it’s key to remember that your HSA (health savings accounts) can be used to pay for Medicare parts B and D, long-term care premiums, long-term care, and normal medical, vision, and dental expenses in retirement.

Both you and your spouse should have your own HSA the year you turn 55. This lets you get all the catch-up contributions you deserve. IRS regulations require that each HSA catch-up contribution be associated with one Social Security number, so you and your spouse each need an HSA to max out your contributions. It’s not important which spouse has more. This is because you can each spend your HSA dollars to pay the other’s eligible medical expenses.

Even if you’re prohibited from contributing to your HSA because you’re enrolled in Medicare, you can still grow that account by moving it to an investment-focused HSA. There may be a transfer fee to move your money to the new HSA, but the receiving HSA may be willing to offset that transfer out fee. Just ask.

In many married couples, the breadwinner and insured party is often the older of the two spouses, and that older spouse will usually enroll in Medicare as soon as possible. However, in some instances, he or she continues to carry the family healthcare policy at work to cover his or her spouse. This can be an opportunity because the spouse has family coverage, and in the eyes of the IRS, can make the family contribution to her, or his, HSA. The older spouse who’s on Medicare can’t contribute to an HSA.  

However, as a family, they can make the family contribution to the HSA and one catch-up amount of $1,000 (assuming the contributing spouse is 55 or older). If both spouses have their own HSAs for catch-up purposes, it’s easy to shift who makes the contribution from the spouse covered by Medicare to the spouse who is primarily covered only by the high deductible. However, it can’t be payroll deducted from the ineligible spouses’ income, so you may sacrifice the FICA savings.

If you are employed and covered by your employer’s healthcare plan, you may be able to delay enrollment in Medicare. If you’re currently receiving any kind of Social Security or railroad retirement benefits, you’re automatically enrolled in Medicare Part A, so this won’t apply to you.

Postponing your enrollment in Medicare and your acceptance of Social Security retirement benefits lets you extend your eligibility to make contributions to your HSA.  However, you must be employed and covered by health insurance through your current employer. Your insurance must also be what is known as creditable coverage. In addition, if you postpone your Medicare enrollment, there are some specific timing requirements you must meet when you do transition from your employer plan to Medicare.

Reference: healthsavings.com, "Approaching Retirement? Five Tips to Maximize Your Investment HSA"

Need help sorting it all out? Give us a call at (978) 342-1914 or visit us at www.dellamonaca.com.

Is Your Retirement Plan Ready?

Part of the value of developing a plan is the process that requires you to consider and answer crucial questions.

Everyone should have a written retirement plan. It doesn’t have to be hundreds of pages long. However, even a short document is helpful. Research shows people who started with written plans were more satisfied in retirement than others. Most likely it’s because creating a plan makes you carefully think about key issues and have reasonable expectations.

Forbes' recent article, "5 Key Retirement Questions You Need To Answer When You're 50 Or Older," boils it all down to a few key ideas:

How long will retirement last? Your plan will be vastly different if your life expectancy is 10 years than if it is 30 years. Most folks underestimate average life expectancy, and that can result in financial distress in later years of retirement. Check online sources to determine the average life expectancy for your age group.

When will you be ready to retire? This answer frequently determines how satisfied you’ll be in retirement. Remember that your age shouldn’t determine your retirement date. It’s retirement readiness that counts.

What are you going to do in retirement? This also includes how you think you’ll spend your financial resources. Create a personalized spending estimate, based on your interests and planned activities. Decide the lifestyle you want in retirement, and estimate the current costs. Most people spend less as they age because they’re less active.  However, it might increase later in life because of medical and long-term-care expenses. Add inflation into your estimates, because most of what you’ll spend money on in retirement will go up in price over time.

When will you be able to retire? Being able to retire means your income and assets are enough to let you to maintain the desired standard of living. Unfortunately, the retirement date isn’t always in your control, so add in a contingency that you might retire before you want due to health or layoffs.

It is difficult to estimate medical expenses and long-term care in retirement. Many new retirees underestimate these costs and overestimate what Medicare and other government programs will pay. It’s wise to maximize insurance coverage. Sign up for a Medicare Advantage plan or join traditional Medicare and add a Medicare supplement (Medigap) plan and Part D prescription coverage. Your fixed monthly expenses will be more with the insurance premiums, but your potential maximum out-of-pocket expenses will be less.

How will you manage and spend your retirement savings? You'd better have an investment strategy and be ready to modify it as circumstances change. Overspending in early years of retirement can mean financial distress or major adjustments later in retirement. Develop a spending policy and revisit it each year, as market conditions and your spending change.

Reference: Forbes (April 3, 2018) "5 Key Retirement Questions You Need To Answer When You're 50 Or Older"

Need help planning for your own unique situation? Give us a call at (978) 342-1914 or visit us at www.dellamonaca.com.

Free Stuff from Medicare? Count Me In!

These preventive checkups help you maintain control of your healthcare.

It’s probably a news flash to hear there is something your government will give you without a catch.

But that is exactly what AARP found out in a recent article, "10 Free Services Medicare Provides." The Affordable Care Act (ACA) expanded access to free preventive care. This includes vital Medicare services.  

Here are the examinations and screenings that Medicare recipients now get for free (from the taxpayers).

1. A “welcome to Medicare” preventive visit: Available only in the first 12 months you’re on Part B, this visit includes a review of your medical history, some screenings and shots, measurements of vital signs, a vision test, a review of potential risk for depression, the opportunity to discuss advance directives, and a written plan detailing the screenings, shots, and other preventive services you should have. This visit is covered only once, but it’s a good perk.
2. An annual wellness visit: You’re eligible for this free exam if you’ve had Medicare Part B for more than 12 months. Your doctor will review your medical history, update your list of providers and medications, take your vital measurements and provide personalized health advice and treatment options. Note that while the visit is free, your doctor may order other tests or procedures that might have a deductible or copay cost.
3. Mammogram: An annual screening mammogram is free. If you need a diagnostic mammogram, you’ll pay a 20 percent copay, and the Part B deductible will apply.
4. Colonoscopy: A screening colonoscopy once every 24 months is free if you're at high risk for colorectal cancer. Even if you’re not at high risk, Medicare covers this test once every 10 years.
5. Diabetes screening: You can get two free screenings a year if you have a history of high blood pressure, abnormal cholesterol levels, are obese, or have a history of high blood sugar levels. The screenings are also free if two or more of these issues apply to you: (i) you’re over 65; (ii) you’re overweight; (iii) you have a family history of diabetes; or (iv) you had diabetes when you were pregnant.
6. Prostate cancer screening: An annual PSA test is free, and a digital rectal exam costs 20 percent of the Medicare-approved amount, along with the physician services related to the exam. The Part B deductible also applies.
7. Vaccines: Your annual flu shot, vaccines to prevent pneumococcal infections like pneumonia, and shots for hepatitis B (for those at high or medium risk) are free. The shingles vaccine is not covered by Part A or Part B. However, it may be covered by your Medicare Advantage (MA) plan or your Part D prescription drug plan.
8. Cardiovascular disease (behavioral therapy): As a Medicare recipient, you also get a free annual visit with your primary care provider to help lower your risk for cardiovascular disease.
9. Lung cancer screening: An annual test with low-dose computed tomography (LDCT) is free if you’re between 55 and 77, don’t have any signs of lung cancer, are a smoker or have quit in the past 15 years, and you have a tobacco smoking history of at least 30 “pack years” (meaning you smoked an average of one pack a day for 30 years).
10. Depression screening: Your annual depression screening is free, if it’s conducted in a primary care center where followup and referrals are available. There may be copays for followup care.

Reference: AARP (November 21, 2017) "10 Free Services Medicare Provides"

Need help with your own unique situation? We can help. Give us a call at (978) 342-1914 or visit us at www.dellamonaca.com.

Figuring Out What You’ll Get from Medicare This Year

The maze of government rules can create unexpected outcomes. That’s certainly the case for 2018 Medicare premiums.

The standard Part B premium remains $134 a month, but many beneficiaries will pay more for Part B. As Kiplinger’s recent article, "Medicare Part B Premiums Rise for Some," explains, this is because of the hold-harmless provision.

In 2017, this clause had a positive effect for most beneficiaries. For those whose Medicare premiums are automatically deducted from Social Security, the rule restricts premiums from going up more than the amount added to benefits by the annual cost-of-living adjustment. In years when there’s no Social Security COLA or a small COLA, like last year’s 0.3 percent, Medicare premiums are restricted. Although the standard Part B premium for 2017 was $134 a month, the minuscule COLA resulted in many people continuing to pay $109 a month.

However, inflation in 2017 meant that there was a 2 percent COLA for 2018. Although that might not look like much, for about 42 percent of beneficiaries, it’s enough to allow Medicare premiums to rise to $134. The hold-harmless clause will continue to impact 28 percent of beneficiaries in 2018. For folks with lower Social Security benefit amounts, the 2 percent COLA isn’t enough to get their Part B premiums up to $134, so they’ll pay less than the standard amount.

Those who aren’t held harmless, like people who don’t deduct their Medicare premiums from their Social Security benefits or new Medicare enrollees, will pay the standard $134 a month.

High incomers aren’t protected by the hold-harmless rule. They’ll pay premiums much higher than the standard amount, up to about $429—just for Part B. They also face a surcharge as high as about $75 a month on Part D premiums. The surcharges for Parts B and D start when adjusted gross income plus tax-exempt interest is more than $85,000 if single or $170,000 for married couples filing jointly.

While the premium surcharge amounts for Part B remain static in 2018 (and are slightly lower for Part D), the income thresholds in the three highest tiers decrease. This means some high incomers will pay more.

If you’re looking at an income-related surcharge, see if you qualify for relief. The government decides who owes surcharges by examining tax returns from two years ago. Thus, 2018 surcharges are based on income reported on 2016 returns.

If your income has dropped because of a qualifying life-changing event, like the death of a spouse, divorce, or retirement, you can ask for relief. If granted, the government will use your income from a more recent tax year to determine if you must pay the surcharge.

Reference: Kiplinger (January 2018) "Medicare Part B Premiums Rise for Some"

Need help? Give us a call at (978) 342-1914 or visit us at www.dellamonaca.com.

Why Long-Term Care Insurance Is Great for Protecting Your Assets

Long-term care (LTC) refers to a broad range of services that assist those with chronic conditions, such as cognitive impairment or a need of help to perform the essential activities of daily life (ADLs), such as dressing, bathing, eating, transferring in/out of a bed or chair, continence, and toileting.

A U.S. Department of Health and Human Services report from September 2008 determined that about 70 percent of people over age 65 will require long-term care (LTC) services at some point, and some 40 percent will require nursing home care.

It's also expensive, says nj.com, in the recent article, "Should we get long-term care insurance?"

Data from Genworth's 2017 Cost of Care Survey found the national median cost of an assisted living facility is $3,750 per month. A nursing home costs $8,010 per month. The cost is also typically more for those with dementia. According to the American Association for Long-term Care 2008 Sourcebook, more than half of people needing nursing home care require a stay of more than 12 months, with almost 25 percent staying more than three years. Those in the latter group can really wreck a family's finances.

In addition, most people don’t know that Medicare only covers a very narrow set of LTC costs. Similarly, Medicaid only covers those with very limited financial resources. For all but the extremely wealthy, long-term care insurance (LTCI) is the best solution to defray the expense of home healthcare, assisted living, or nursing home care. Yes, it can be pricey.

Getting coverage when you are relatively young and still in good health helps to keep the costs down.

Some folks are worried they’ll be paying LTCI premiums for many years and die before they ever use the benefit. However, we do the same type of thing for auto or homeowners insurance. Everyone gets this coverage, because the financial risk of doing without is too great.

Insurance companies have combination life insurance/LTCI policies, called "hybrids," that address the fear of wasted premiums. With these hybrid policies, provided that the premium is paid for your lifetime, you or your heirs will receive the full policy benefit, as the life insurance death benefit, the LTC benefit, or a combination.

Reviewing LTCI options can be difficult, because of the number of policy variations. Speak with a fee-only financial planner to review your situation before talking to an insurance agent.

Reference: nj.com (January 12, 2018) "Should we get long-term care insurance?"

Need help with your own unique situation? Give us a call at (978) 342-1914 or visit us at www.dellamonaca.com.

Make 2018 Great by Being Smart with Your Money

Make 2018 the year you take the steps to save money on insurance, reduce your taxes, boost your retirement savings, and protect yourself from identity thieves.

Now is a great time to make some key financial moves that can help you throughout the year and make it easier to reach your goals.

Here are some steps to save money, take advantage of new financial strategies, and protect your identity and your accounts, as detailed in Kiplinger’s "12 Smart Financial Moves for the New Year."

1. Review your insurance premiums. Reconsider all your insurance coverage, particularly auto. This can be an easy way to free up extra cash. Ask your current insurer for all available discounts, and get quotes from other insurers for the same amount of coverage.
   
   
2. Increase your retirement-savings contributions. If you've been maxing out your 401(k) or are turning 50 this year, up your automatic contributions to take advantage of higher limits and catch-up opportunities. You should also set up automatic monthly contributions from your bank account or paycheck into an IRA. This will allow you to save before you have an opportunity to spend it.
   
   
3. Make a charitable-giving plan. When you earmark funds for charity, think of the ways you can contribute—by writing a check, giving appreciated securities, giving to a donor-advised fund, or making a tax-free transfer from your IRA (if you're older than 70½). Ask your estate planning attorney how the new tax law may impact your charitable-giving strategies.
   
   
4. Make the most of the new tax law. Speaking of the new tax law changes, look at how it may affect your IRA conversions, home-equity loans, medical-expense deductions, and 529 college-savings accounts.
   
   
5. Plan for your RMDs. If you're already older than 70½, or if you're reaching that milestone in 2018, start planning for your required minimum distributions (RMDs). Determine from which IRAs, 401(k)s, or other accounts you'll need to withdraw money, and consider which investments from which you'd like to draw. You may also want to investigate making a tax-free transfer of your RMD to charity, which will become more common now that fewer people will be itemizing under the new tax law.
   
   
6. Make some Medicare decisions. If you're going to be 65 this year, start thinking about Medicare. If you don't have health insurance through a current employer (or a spouse's current employer), then you’ll need to enroll within the three months before the month you turn 65 and the three months after that. If you're still working and have health insurance through your employer (or if you're covered by your spouse's employer), you may not need to sign up just yet. However, be very careful to avoid paying a late-enrollment penalty or missing out on important coverage. You should also plan out how you're going to fill in the gaps in Medicare—like with a Medicare supplement policy and Part D prescription-drug coverage, or by having medical and drug coverage through a Medicare Advantage plan.
   
   
7. Select your military pension. If you're in the military and joined between the years 2006 and 2017, you'll have a big decision to make on your retirement benefits this year. You can stay with the current retirement system, which gives you a nice pension—but only if you stay for 20 years or more. You could also opt for the new system, which reduces the pension but also provides matching contributions for the Thrift Savings Plan that current service members can keep immediately.

Reference: Kiplinger (January 5, 2018)"12 Smart Financial Moves for the New Year"

Need help sorting it all out? Give us a call at (978) 342-1914 or visit us at www.dellamonaca.com.

Understand How Medicare Works

Will seniors take a $473 billion loss to the program they depend on for care?

If you're counting on Medicare to cover your healthcare costs after you turn 65, you may be in for a shock that could mess up your retirement.

The Motley Fool explains in its recent article, "3 Reasons Seniors Can't Count on Medicare to Cover Health Costs," that even for seniors who purchase optional Medicare supplementary plans, healthcare costs may be as high as $350,000 for a couple during their retirement years. That gigantic number doesn't even count long-term care costs and is based on the current benefits system. The costs could be much greater, if Congress alters Medicare.

Here are three big reasons you can't count on Medicare, if you have costly health issues after age 65:

1. Medicare’s coverage of long-term care coverage. About 70 percent of seniors will need long-term care during their lifetimes, which will be needed for an average of three years. However, Medicare most likely will pay nothing toward this care. It just covers skilled nursing care and provides this coverage, only if you have a qualifying hospital stay. Most seniors need custodial care or routine help with daily activities like bathing or preparing food that necessitate long-term care. Custodial care isn't covered by Medicare, Medicare Advantage, or Medigap policies.
   
   Medicaid will pay for nursing home care, but you'll have to spend down to qualify because of Medicaid's eligibility requirements. You may need an asset protection plan to do this, so talk with an elder law attorney.

2. Medicare’s high coinsurance costs. Medicare doesn’t provide 100 percent coverage for healthcare services, even when it does cover your care. If you need hospital or inpatient care (covered by Medicare Part A), you will need to pay a $1,316 deductible (in 2017). If you're in the hospital for more than 60 days, your copay will be $329 per day or more depending on the length of your stay.
   
   Medicare Part B covers routine care like doctor visits and durable medical equipment. It also charges a copay of 20 percent for services and Medicare Part D plans for prescriptions may require costly premiums, with deductibles up to $400. It may also have a copay based on the tier of a covered drug. Medicare Advantage plans or Medigap plans may pay part of the copay costs, but this means paying extra premiums, with most of these plans still requiring beneficiaries to cover some of their care expenses.

3. Medicare’s future. Medicare is financially troubled. A recent report from the Medicare Board of Trustees' revealed that the Hospital Insurance Trust—which covers Medicare Part A expenses—is expected to be depleted by 2029. Financing will need to grow at a faster pace to keep up with projected expenditures.

Reference: Motley Fool (November 12, 2017) "3 Reasons Seniors Can't Count on Medicare to Cover Health Costs"

To make certain that healthcare expenditures don't ruin your retirement, educate yourself about Medicare coverage limitations as early as possible and make plans to overcome them. We can help. Give us a call at (978) 342-1914 or visit us at www.dellamonaca.com. 

The Cost of Long-Term-Care Insurance

With long-term-care insurance, it’s important to look at how the benefits are structured.

Healthcare costs are skyrocketing. For seniors or those who need help with some daily activities, the costs can easily run into thousands of dollars.

The Chicago Tribune’s recent article, "Thinking of buying long-term care insurance? Consider these costs," reports that a 2015 cost of care survey from insurance company Genworth Financial estimated the national median cost of care for a home health aide to be almost $46,000 annually, while the national median cost for a private nursing room home is more than $91,000 annually.

Because of high costs, some people are considering long-term-care insurance to pay for these bills. However, if you’re considering purchasing this insurance,  it is costly, very complex, and not everyone will qualify.

For those who don’t have many assets, an LTC policy may be too costly. These policies are less expensive for younger and healthier people. Policies are designed so the buyers purchase a set amount of benefits for a certain time period.

The premiums can go up dramatically as people age.  This is why someone purchasing a policy in their 40s will spend less than someone in their 50s or 60s. With rising premiums, buyers must consider if they’ll have future assets to cover premium increases. Some policies have optional nonforfeiture riders that will protect what was already paid, if a policyholder can no longer afford the premiums.

LTC policies require medical underwriting, and having preexisting illnesses will increase the cost.  There are also many situations where a person won’t be eligible for coverage, including cognitive impairments such as dementia, Parkinson’s, and Alzheimer’s.

LTC policies last as long as the money purchased by the policy is available, possibly three or four years. When the policies end, people need to use their other assets if they still need care. The policies typically start coverage when someone needs help with two or more daily activities, like bathing or dressing (after a waiting period).

Reference: Chicago Tribune (November 6, 2017) "Thinking of buying long-term care insurance? Consider these costs"

It is money well spent to talk to an elder law attorney to see if these policies make financial sense. They can review a person’s assets and any other coverage they may have from Medicare, Medicaid, and other state and federal programs that are designed to support the sick and elderly.  Give us a call at (978) 342-1914 or visit us at www.dellamonaca.com.