I had an interesting conversation with a long term care insurance representative the other day. I cannot reveal her name and you will see why. She has been known in our area for years as one of the premier agents for this insurance.
She does not sell it anymore.
She said that the bank breaking (my term) premium increases made it simply unaffordable. Some of her clients saw increases of 80 to 90%! They thought they had arranged their future free of the worry of the cost of long term care, but now could not even afford the insurance. She felt she had mislead them and betrayed their trust. Her fix, and wise advice for anybody who has an LTCi policy, is to reconfigure the policy so that the client can still keep the money they had put into it. There are a number of variables in any policy that can be reduced. They might be the daily rate, elimination period and so on. Sure a person may have 80 to 90% less coverage but they will preserve the money they have in the policies.
Is there a way they can cover the now bared exposure? The short answer is “Yes.” We can cover the nursing home portion of the LTCi policy and that way leave the policy free to cover in-home and assisted living care. We do so by using a Medicaid based irrevocable trust.
The Medicaid irrevocable trust takes advantage of Medicaid’s five year look back. You put as much as you want of your life-savings in this trust and after five years it is not considered as an asset by Medicaid. Yet you can get all the income from your investments just like you do now. It’s almost like having your cake and eat it too. There is one more bit of good news here: the cost of the trust is less than just one year LTCi premium! That’s not an annual charge, that is one time only. (!) The note of caution to add is that the money you put in the trust should be that you do not expect to use.
Give me a call to learn more at 248-356-3500. Ask for Jim. Hmmm, I think you knew that didn’t you? Oh well, talk to you later,
Jim
