The elderly population is rapidly increasing among individuals 85 and older. As this demographic continues to grow, assisted care is often needed to provide services to help people maintain self-sufficient lives regarding one’s health. But what about one’s assets while being cared for?
From home health and nursing facilities to adult day care, these services for many are no longer amenities but necessities that provide daily living services. If not properly prepaid for, it can come as a financial drain leaving some in unfortunate situations left to mortgage off their homes, cars or other valuable assets to pay for the cost of care.
Teresa Eagan, owner of Long Term Care Insurance Associates Inc. says individuals should invest in preparations for long-term care as they do any other commodities they place at high value by purchasing insurance.
“People don’t realize there is a very high risk for LTC,” Eagan said. “Figuring out how they are going to prepare and pay for these needs is advantageous.”
Though most are familiar with car or health insurance, many have never heard of or are not knowledgeable about long-term care insurance.
These policies are utilized to help offset some of the financial risks incurred if the need for services is essential. Within these policies, according to Eagan, one has the option of choosing non-partnership or opting to choose the partnership program.
Though virtually identical to one another, the partnership policy has something the traditional long-term care insurance policy doesn’t — asset protection.
Rebecca Vaughan, director of the Indiana Long Term Care Partnership Program, says the partnership policy was developed to create LTC awareness, encourage financial responsibility and stop the drain on Medicaid dollars.
“The state of Indiana formulated the Indiana partnership program, the collaboration between government, insurance companies and insurance agents in 1993,” Vaughan said. “This is to give people the back up security in knowing if they exhaust their policy then they have the back up security.”
With the average daily cost for a nursing home stay reaching $50,000 per year and home health assistance averaging $20,000 a year, the partnership policy’s built in protection helps to alleviate the strain on the consumer. Within the long-term care insurance policy, the partnership program’s asset protection consists of two types — dollar for dollar and total asset.
For every dollar of claims that were paid out in long-term care services one could protect $1 of their assets. For total asset protection, if one purchases an amount of policy in benefits, then regardless of what your assets are, all of your assets could be protected.
“We are talking about your savings, checking, IRA’s and your CD’s,” Vaughan said.
Eagan says some may be reluctant to invest in opting to choose the partnership policy to receive asset protection due to the state of the economy and the loss of value in assets.
“One of the things the economy has suggested is many of us may not have enough excess money to be able to pay for our long term care needs, but we are going to have to figure out how to pay for it,” Eagan said. “I don’t know that we can trust on our own that we can pay for that out of pocket.”
Projections suggest that one out of three men and one out of every two women are going to need some type or level of long-term care services.
“Just like we take financial responsibility for our home and our care, we really need to take that same responsibility for our long term care needs,” Vaughan said. “We are in control of what types of services or where we want to go for those services.”
To date, more than 44,000 partnership policies with built in asset protection has been purchased.
