If you developed a prolonged physical illness, disability or a cognitive impairment and required long-term care, how would you pay for the services? Did you know that long-term care costs could be anywhere from $12,000 to $119,000 a year (depending on the type of care required)? Many people believe that they will be able to rely on Medicare or Medicaid to foot the bill. Unfortunately, this is a common mistake.
Medicare may cover up to 100 days of skilling nursing home care per benefit period under specific situations, but after 20 days beneficiaries must pay a coinsurance fee (this fee was $128 per day in 2008). Most people would prefer to receive care in their homes. Medicare will not cover homemaker services. Medicare will not pay for personal care given by home health aides unless you meet certain criteria. Ultimately, you should not depend on Medicare to cover long-term care costs.
So if Medicare won’t cover my long-term care costs, Medicaid will, right? Medicaid could cover some of your long-term care costs, but you will have to meet their criteria of low income and you will have spent most of your assets. And even then, your state is required by federal law to recover from your estate the costs of the Medicaid-paid benefits you receive.
You may be asking yourself, “How can I protect my assets, my estate and my family members’ assets from my long-term care bill?” Answer: Long-Term Care Insurance (LTC Insurance). This type of insurance is not for everyone. For example, if your only income is your Social Security check, you may not be able to afford the premium. But if you have a large amount of assets that you do not want to liquidate by paying for long-term care, then you may want to consider purchasing LTC Insurance. Keep in mind that you will have to answer health questions to qualify.