Does Your Long-Term Care Insurance Do the Job?

If you want to protect your residence against nursing home expenses, long-term care insurance is an excellent way to do this. You must know what is required of long-term insurance and be able to determine whether your long-term insurance will do what you need to have done.

If you apply for Medicaid, and you have a policy of long-term care insurance which provides at least $125 per day for 730 days, the Medicaid authorities will not put a lien on your house to recover amounts paid on your behalf to a nursing home. If you do not have coverage providing at least $125 per day for 730 days, Medicaid may place a lien on your house and recover what has been paid on your behalf.

Many long-term care insurance policies provide both nursing home coverage and home health care. A problem may arise if a policy provides a certain pool of money ­for instance a policy providing $125 per day for 730 days (a total of $91,250) may state that this is the maximum amount available.

If home care is availed of, the amount paid for home care will reduce the $91,250, so that the policy will no longer provide $125 per day for 730 days. The policy will no longer quality, so if you enter a nursing home at that point, your home will no longer be protected.

Part of the long-term care insurance premium is deductible. If you are over age 70, you may deduct up to $3,850 if you itemize deductions on your federal income tax return.

If you have a policy providing the minimum of $125 per day for 730 days, you must be careful not to use any of this amount for home care. If you are about to purchase a policy of long-term care insurance, be careful that the policy is of sufficient size so if you use some of the home care benefits, you will still have enough coverage left in the policy to provide for $75 per day for 730 days. An alternative is to purchase two policies one for the minimum nursing home coverage, and another for home care coverage.

Contact us if you have any questions about long-term care insurance.