The majority of the time seniors will either use long-term care insurance to pay the cost of nursing home care, or they will try and qualify for Medicaid to help them cover these costs. In some situations it may be a good idea to use long term care insurance in order to help you qualify for Medicaid later.
One reason why someone might want to combine long term care insurance with Medicaid planning is if they can afford coverage for a certain amount of time, but may not be able to pay the premiums over the long term.
In this situation you can purchase insurance for a specific amount of time, probably about 5 years and then transfer assets during this time, either to family or through a trust created to hold these funds for family members. This will ensure that you will qualify for Medicaid when you can no longer afford your insurance premiums. With this tactic you will want to ensure that you keep enough of your assets to cover your premiums for at least five years, as well as any other expenses that you might have.
Another situation where you might considering combining Medicaid planning with long term insurance would be if you want to transfer assets from your name, but if something were happen would be unable to pay for the five year look back period that Medicaid requires. If you have long term care insurance, you will be covered until the penalty period is over and you would qualify for Medicaid.
Using a strategy of combining Medicaid planning with long term care insurance is a good solution if you have assets that you would like to protect if you should need Medicaid in the future. If you would like to using long term care insurance to supplement the five year look back period required by Medicaid, it is a good idea to talk with an attorney experienced in Elder Law and Estate Planning. An attorney can help you with your plan to ensure that it does what you intend to it do.
Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.