A Shocking Assumption About Long-Term Care Insurance

An article on the website investorjunkie.com recently discussed some of the considerations involved when deciding whether to buy long-term care insurance. The article stated that as a rule of thumb, “if your net worth is less than $500,000, then forgo LTC insurance, as you will likely qualify for Medicaid or some other sort of assistance.” Over 70% of the population will need long-term care at some point. The writer explains that even seniors with a net worth of $500,000 are likely to run out of money trying to pay their living expenses if they also need to pay for long-term care. These seniors will then qualify for Medicaid benefits because they won’t have any money left. Seeing that number and that expectation in print is truly shocking.

Many people who have a net worth of $500,000 would consider themselves relatively well-off, or at least comfortable. Many, or most people, retire with less than that amount. Yet these people are likely to end up needing the assistance of a government program. Their money will not last long enough to cover the care they will need.

This is why seniors need to re-think two issues:

  1. There is a good reason why we say that long-term care is ruinously expensive: it is. If you retire with a net worth of $500,000, that will likely not be enough to cover your expenses for the rest of your life if, as is likely, you end up needing long-term care. Depending on where you live, and your long-term care needs, this amount of money could be depleted in three years or less.
  2. Today, seniors need to understand that for many or most of them, Medicaid is in their future. They are likely to need Medicaid whether or not they planned for it or wanted it, even if they start out with a relatively large amount of assets.

Medicaid is a government program that you pay for with your tax dollars, so there is no reason you should feel bad about accessing it.

But there’s hope! With proper planning, you can protect your money, and access Medicaid at the same time to pay for your long-term care. Elder Law strategies are ideally suited to helping you to do this.

Have questions or want more information? Contact us now!

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