Is a nursing home long term care policy worth having

Attorney Tom Olsen: Robert, I had some clients in last week and they were telling me that they had a long-term care policy, and I could tell by the way they said that they were thinking, “Oh, well we're good, we're golden. We've got a long-term care policy,” and I was telling them that they are not all that they are cracked up to beat.

Attorney Robert Hidock: No, they're not. I actually had a client this week that emailed me his policy. Some of these policies, this guy, he's retired but he's working to pay for the premium of his long-term policy, which is $525 a month. Long-term policies can be good if you're at home and you can get home healthcare. The problem becomes if you have to go into a skilled nursing facility. You have paid years and years and years for this policy only for it to have to go into a nursing home because there's not one long-term care policy that will actually pay for a private pay skilled nursing facility because that's $12,000 a month.

Most long-term care policies are $100 a day or $200 a day. The problem is, because this guy is someone that's paid a lot of money and would otherwise be under income, but this person's long-term care policy was an income policy. Then that income is added onto his regular income, so then he needs a QIT to qualify for Medicaid because he's over income, and then all that money, almost $7,000 a month goes right to the nursing home.

Tom: Well Robert, that’s what I'm thinking is that these long-term care policies have given people a false sense of security that it's not going to do what they hope is going to do. You told me the premium was $500 a month. I thought I've heard of people paying a lot more than that per month for a premium.

Robert: For the--

Tom: For the long-term care policy.

Robert: Yes, and this was just the one that I happened to look at. In my own world, with my mom, she had a long-term care policy. after I looked at it, and I had our Medicaid expert look at it, and it was advised that we not carry those payments because they were starting to be a lot of money. The good news is the money that she paid into it, she can still get that back in long-term care. It is not like it's totally thrown down the drain. She still has that income, that potential income.

Tom: Well, the bottom line is with the planning that we can do here at the Olsen Law Group, they don't need a long-term care policy because we have the ability to protect all of their assets from the cost of a nursing home, and that's going to be their home, and IRAs, and money in the bank as well.

Robert: There's not, knock on wood, there hasn't been one asset that we haven't been able to protect. I would much prefer a client who's aging, who's spending a $500 or $750 a month for this policy. That money could probably be better spent elsewhere. I often think it's the ultimate disrespect. You've paid so much money, only when you're in crisis and you need help that the money's going to go to a nursing home. Where if you didn't have it, you still would be going to a nursing home and you wouldn't have to spend all that extra money.

Tom: If there's a listener right now out there that says, ''Hey, I've got a long-term care policy.” Hey, they're probably just like me, you could pick up that policy and not understand a word about it, what it says. Would they be able to send it to you for a review?

Robert: Yes, they could certainly email it to me. With Medicaid, there's two types of long-term care policies. One is Medicaid will determine as income, which means that yes, it will be considered income for a qualified income trust. If you go on Medicaid, it gets computed with your monthly income, would have to go into a qualified income trust and then pay a nursing home. Or the other type of policy is a reimbursement policy where it pays up to a specific amount every single month that actually then the long-term care policy issuers, they will pay the nursing home directly so you won't even see that money.

Tom: Got it.

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