Last updated on May 20th, 2019
Long-Term Care Insurance and Your Virginia Estate Plan
Long-term care insurance provides extra security to help supplement the high costs of long-term care. Purchasing a long-term care insurance policy is similar to purchasing a life insurance policy.
Purchasing an insurance policy is a gamble where you are planning for the worst case scenario. However, there is a good chance you may never see any real benefit from your policy. When someone purchases a long-term care insurance policy, they are attempting to protect themselves financially in the event that they require a long stay in a nursing facility.
According to U.S. Department of Health and Human Services, the average cost for a private room in a nursing facility is $229 per day. This is an annual cost of $83,585. Long-term care insurance provides extra security to supplement these high costs and prevent the depletion of your financial resources.
By purchasing a long-term care insurance policy, you provide yourself extra security to keep your estate intact. This allows you to keep possession of your financial assets and allow your estate to pass to your loved ones.
What Will a Long-Term Care Insurance Policy Cover?
Long-term care insurance covers many of the same costs as Medicare and Medicaid. Basic long-term care insurance policies will help supplement the costs of at home assisted living. Additionally, these policies will cover the costs of hospice care, specialized Alzheimer facilities, and even adult day care.
Finally, it covers stays in nursing facilities. Your policy will be beneficial if you require extensive 24-hour monitoring and around the clock care provided by a nursing facility. In this event, your long-term care insurance policy will help supplement these costs.
How much does Long-Term Care Insurance Cost?
The primary disadvantage of a long-term care insurance policy is that it is an expensive financial commitment. Purchasing a long-term care insurance policy could cost you on average $2,466-per-year. To acquire a rate like this you will have to obtain the policy by the time you are sixty.
However, you likely will not use your policy until you are in your eighties. This means that you face the real possibility of paying 20 years of premiums before you see any benefit from the policy.
Unfortunately, you likely won’t cash in on this policy until much later in your life. Therefore, you may be stuck paying high monthly premiums for several years without any benefit. It is important to remember that purchasing a policy is by no means an investment because you may never see any significant benefit.
What happens if I don’t Purchase Long-Term Care Insurance?
It is important to know that you do not have to purchase long-term care insurance. If you do not purchase this type of policy you are not out of options. In the event that you require an extended stay in a nursing facility, Virginia’s Medicaid program will pick up the costs of your long-term care.
However, Virginia’s Medicaid program will not kick in until you have depleted your own financial resources. So if you do not purchase a policy, you run the risk of losing all of your financial assets before receiving any assistance from Virginia’s Medicaid program. Therefore, you won’t be on the street without purchasing long-term care insurance.
How does the Purchase of Long-Term Care Insurance affect the rest of my Estate?
The primary advantage of a long-term care insurance policy is that you get to keep your financial assets in the event that you require expensive long-term care. This means that purchasing a policy will allow your estate to remain intact.
Without purchasing a policy, you take on the real risk of losing your assets before qualifying for state financial assistance. Unfortunately, this would result in jeopardizing your estate to pay for your long-term care.
If you do require expensive long-term care, you may not have many assets left in your estate to pass to your loved ones. Thus, purchasing a policy keeps your estate intact and allows your financial assets to pass to your loved ones.
Purchasing long-term care insurance supplements your Virginia estate plan to provide you extra security necessary to protect your financial assets. The choice of whether or not to purchase this type of insurance policy is a difficult choice.
If you have significant financial assets that you wish to pass to your loved ones, then this type of insurance policy could be a worthwhile purchase. However, it is important to remember that there is a good chance you may never benefit from your policy enough to justify the high monthly premiums.
Before making the decision to purchase a long-term care insurance policy, you should discuss it with an experienced and competent elder law attorney. Ultimately, having an experienced attorney by your side can best protect your long-term financial needs.