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Long-Term Care Insurance

Should You Buy a Long-Term Care Policy?

Medicaid is a federally sponsored program whose participation limits are set by the state in which you reside. It is for those people who have minimal assets and very little income. To be eligible, you basically have to "spend down" your assets to meet the state's eligibility criteria. Legislation has made it increasingly difficult to transfer or gift your assets, either directly or through a trust, and still be eligible for Medicaid without waiting a significant amount of time. Basically, Medicaid has a 60-month look-back period, in which states may delay eligibility for Medicaid benefits if a person has disposed of resources for less than fair market value.

The bottom line is, you'll pay a big price if you're counting solely on Medicaid to pay your nursing home bills someday. You'll virtually have to leave yourself with little or nothing in the bank or divest yourself from possession and control of your assets many years before entering a nursing home. In addition, some states have income limits for Medicaid eligibility.

For more information on Medicaid rules in your state, contact your local Office on Aging.

Your first step is to determine if you should buy a long-term care policy. If you decide you should, there are some things to consider when shopping for the policy. And you may be eligible for tax benefits based on your premiums.

Review the following table to help you make your decision:

If You Are over 55, and:	Should You Consider Long Term Care Insurance?*
You expect to have no assets other than a home, car, clothing and a burial plot.	No—You will probably qualify for Medicaid anyway.
You cannot afford the premiums.	No—If you fall behind on the premium payments, you will lose coverage anyway. Also, it is better to devote the premium payments to retirement savings instead.
You have a life-threatening illness, and strongly feel that you will not live past age 70.	No—If it is not likely that you will live past age 70, the odds of having a long stay in a nursing home are small. Check to make sure that you have adequate medical insurance.
Your family has a history of diabetes, Alzheimer's disease, arthritis, stroke, etc.**	Strongly consider—These illnesses can result in long nursing home stays and tend to run in families. If you have significant assets, long-term care insurance may be a good investment.
There are significant assets other than a house.	Yes—You have significant assets and it may be difficult to qualify for Medicaid.
You want your house to go to family or friends and not to be used for unpaid long term care costs after you (and your spouse) die.	Yes—Although the house is protected from Medicaid, many states can seize the property after you and your spouse die.
You strongly object to being on Medicaid.	Yes—Medicaid is government assistance that puts strict limits on people in the program.
You want choices when selecting a nursing home.	Yes—Some nursing homes do not accept Medicaid patients in their facilities. If you can pay with insurance, you will have more options.
You do not expect relatives or friends to be available to help take care of you.	Yes—Without having a network of family or friends to assist you, the chances of needing home-based or nursing home custodial care increases.
You are over the age of 79.	No—It may not be available or may be too expensive.

* The appropriateness of purchasing long-term care insurance is dependent on the specific facts and circumstances of each individual.

** If you have an existing health problem that is likely to result in the need for long-term care, you will probably not be able to buy a policy due to medical underwriting standards.