What you need to know before you buy a long term care policy

Attorney Tom Olsen: Robert, there are some people out there listening right now that saying, "Hey, I got a long-term care policy, I've been paying thousands of dollars per month or per year for this long-term care policy. I'm good to go." Robert, we know that that is often not the case.

Attorney Robert Hidock: Very true. Actually, a client emailed me their long-term care policy this week. It works in certain situations, if you have a very high income at retirement, and you can stay at home, you can get Medicaid long-term care waiver for home health care, and a long-term care policy, it works but if you're going to skilled nursing, you've pretty much wasted your money, because all the income that you receive from it, is going to go straight to the nursing home.

You might have somebody who's paid a premium for 20 years and all of a sudden all that money that they anticipated for their health is going to go to a nursing home, it really comes down to Tom, is the level of care somebody needs.

Tom: Robert, if somebody has a long-term care policy out there, would you be willing to review that form?

Robert: Oh, I will. Because there are two types. As we know, there are two types of long-term care policies. One is income, so that means Tom if somebody let's say their annual monthly gross income was 2000, and then they have a $3,000 a month long-term care policy $100 a day, that's going to be imputed as income to them, make them over Medicaid income limit, and then I have to draft a qualified income trust for them so they'll qualify for Medicaid. Of course, the other type of long-term care policy is reimbursement, which means they're going to pay the nursing home directly.

Tom: I can just imagine a layman or even me trying to read a long-term care policy, I just can be afraid I'd go to sleep in the first place but I guarantee the layman that are paying these premiums on these long-term care policies are not reading them or understanding them. They might really rely on what the salesman told them it was, but that may not be the case.

Robert: It's very similar to Tom that the rates will increase whether you think they're not going to increase, they increase, because sometimes the insurance companies want you to not renew your policies, and then also it's like that. The secondary mortgage is a lot of long-term care policies are bought and sold by other insurance companies. You really have to do your due diligence when you're deciding to buy one of these policies.

Tom: Now, Robert, though some people out there listening right now they're saying, "Hey, Tom, I've got some elderly parents and they don't want to go to a nursing home. We don't want them to go to a nursing home. My parents, they want to stay home as long as they can. They just need a little bit of help and right now, we're supplying that help to him," but Robert, there's a great program out there the Medicaid waiver program that could help their parents. Tell me about that.

Robert: I had a client that came to my workshop. She came to meet with me this week. Her parents are down in Miami, they're in their mid-80s. They can't stay by themselves anymore down there. She's bringing them up here. They're going to live in the adult living apartment. Dad is going to apply for a Medicaid long-term care waiver, and what does that mean? It means home health care. It's still under the guise of ICP Medicaid, institutional care.

We're still dealing with income and asset limits, but the dad's onset dementia will apply for the waiver and so what you're doing, you're waving goodbye to a nursing home. You're agreeing to home health care, about 30 hours a week. You can't get it instantaneously though. You have to go through an interview in a rating system. If you get a five you go to the front of the list. I jokingly call it a fast pass at Disney. Once you get called off that list, you then qualify for Medicaid and get 30 hours of home health care.

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