The statistics are intimidating. According to www.medicare.org, seventy percent (70%) of seniors will need some form of long term care. Neither Medicare nor Obamacare will pay for these costs. Nor will the typical health insurance policy. Yet the costs for this care can reach, or even exceed, ten thousand dollars a month.
So many people, even professional advisors, misunderstand how to properly address this risk. A couple of years ago, I received a phone call from an attorney. He told me about a senior couple he represented. They had approximately $200,000 in assets when the husband suddenly fell chronically ill. He would need long term care. They were obviously worried about how they would pay for his care.
His next words startled me. He asked, “Should I tell them to get divorced?” It was a sincere, earnest question. He was trying to help the husband qualify for Medicaid assistance while helping the healthy spouse maintain sufficient assets on which she could live.
The answer to his question is “NO!” Even if Medicaid were this family’s only option to pay for long term care (an issue I will be discussing in coming weeks), it is specifically structured so that the healthy spouse is not left impoverished. Yet, I continue to hear so much incorrect information, often passed on by well-meaning neighbors, friends and relatives. I know of at least one couple who did in fact divorce in case one became chronically ill.
Given the daunting statistics, and the misinformation about paying for long term care, it is not surprising that many seniors do nothing. They simply don’t know what to do and, therefore, are left with “planning paralysis.” But there are ways to prepare that need not have a dramatic impact on your current circumstances.
Over the next few columns, I will address the options available to seniors to address the costs of long term care. This will include the pros and cons of relying on Medicaid, as well an explanation of the requirement to qualify for Medicaid assistance. Chances are, they are not what you have been told.
© 2015 Steven J Wright