New families and retiring seniors both understand the importance of an estate plan. This collection of legal documents contains deeds to properties, insurance policies and beneficiaries, stock portfolios, IRAs, the will, and even funeral arrangements.
Some planners overlook one crucial part of estate planning, however — long-term health care. Many Americans hope to spend their retirement years traveling the world and enjoying some well-earned peace, but 70% of people over age 65 will need long-term healthcare during their golden years.
Different methods for securing coverage
People can plan for long-term coverage with several different methods. The following examples will not fit every situation:
- Medicaid: Low-income individuals and those over age 65 qualify for Medicaid. This government program covers almost any medical need but limits patient choice. Those planning on using Medicaid to cover long-term care must reduce their estate’s value to meet the low-income thresholds. Without other plans, Medicaid might require a person to liquidate most of their estate.
- Medicare: This government program helps cover emergency medical situations. Patients will find expansive coverage but limited terms. Medicare can pay for an at-home nurse or in-patient services, but only for a limited time.
- Long-term health insurance policy: States rarely offer these plans anymore, as the historic increase in insurance premiums allows few families to afford the rates. People who purchase these plans lose any unspent money.
- Living benefits policy: An “evolved” health insurance policy, living benefits plans combine long-term care with life insurance. Policyholders pay a low monthly premium to secure coverage, and any unused cash will pay out as a death benefit.
- Asset-based policy: These policies operate on the investment of a lump sum of cash or high-value asset. Garnering interest over time, policyholders can take money out to cover their medical needs. Policyholders may recover the asset at any time or allow the insurance company to pay out the remainder to beneficiaries upon their death.
Do not overlook the importance of late-in-life medical care
Those who do not plan for likely health problems during their retirement could face drastic financial consequences when it comes time to pay. A lack of planning could compromise inheritances, insurance policies and even retirement funds. Those looking for options can bring their questions to a local attorney familiar with Michigan’s health insurance marketplace.