It may not be common knowledge, but many of the individuals who eventually need long-term care are not sick in the traditional sense but are merely incapable of caring for themselves. If you are inclined to plan ahead for the possible need for long-term care, one way to start is by investing long-term care insurance.
What is long-term care insurance?
Most people are very familiar with health insurance, life insurance, homeowner’s insurance, auto insurance. But a lesser known type of insurance, long-term care insurance (LTC or LTCI), is also available and can be very useful in Medi-Cal planning. Long-term care insurance is used to help pay the cost of long-term care. More importantly, it sometimes covers care and services that are not usually covered by basic health insurance, Medicare or even Medi-Cal benefits.
Who needs long-term care?
A common misconception is that age is the deciding factor when it comes to predicting who will need long-term care and when. While it is true that nearly 70% of people over the age of 65 need some form of long-term care at some point in their lives, 40% of all people receiving long-term care are actually between the ages of 18 and 64.
Those who qualify for long-term care usually cannot perform at least two of the six recognized activities of daily living (ADLs) which include dressing, bathing, eating, toileting, continence, getting in and out of a bed or chair (referred to as transferring), and walking.
What types of long-term care policies are available?
There are essentially two types of long-term care policies available: traditional policies and combination or hybrid policies. A traditional policy is the most common policy with the insurance premiums being paid on a monthly or continual basis. If the policy is never used, the premiums are not returned to the policy owner, just as with auto insurance. A hybrid policy, on the other hand, is a combination of life insurance and long-term care insurance. Unused premiums paid into a hybrid policy can be returned as a tax-free life insurance death benefit. Combination or hybrid policies have been gaining popularity.
What types of benefits are provided through long-term care insurance?
When it comes to long-term care insurance, coverage includes not only nursing home services but also assisted living, home care, respite care, adult day care, hospice care and Alzheimer’s facilities. When purchasing a long-term care policy, you can purchase the specific types of coverage you want. You can choose to have a live-in caregiver or someone who only visits periodically. You can request a companion, housekeeper, therapist or private duty nurse up to the policy benefit maximum.
The requirements of Medi-Cal
Medi-Cal is a health care assistance program that provides benefits to residents of California who have low-income. Federal, state and local taxes are used to fund this program. All of those funds are used to help those individuals who are eligible to pay for covered medical expenses. With Medi-Cal, most recipients are not required to pay more than a small co-pay for covered medical care.
When California residents should start creating a Medi-Cal plan
It is always better to start Medi-Cal planning as soon as you can so you are better able to plan ahead and ensure that you will qualify for Medi-Cal. However, it is not too late to start creating your plan, as there may still be some options available to you. Even if you suddenly find yourself in need of Medi-Cal, it is never too late to discuss your needs with one of our Sacramento Medi-Cal planning attorneys.
Medi-Cal planning is crucial
Anyone who may find themselves in need of long-term care you seriously consider Medi-Cal planning. As you may already know, Medi-Cal is California’s need-based health care benefits program. That means, in order to become eligible for Medi-Cal benefits, you can only have financial resources of $2,000 or less if you are unmarried. While your primary residence and other specific property are not included in determining the amount of your resources, it is still likely that most people will exhaust all of their savings before Medi-Cal will start paying for the cost of long-term care. But, if you start Medi-Cal planning now, you will be better able to protect your assets and prevent that from happening.
If you have questions regarding wills, or any other estate planning issues, contact the Northern California Center for Estate Planning and Elder Law for a consultation, either online or by calling us at (916) 437-3500.
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