Protecting the Community Spouse with LTCI

Long-term care is expensive, and the cost is only expected to increase. According to Genworth, you can expect to pay $20 per hour for home health care, $43,200 per year for an assisted living stay, and $80,300 per year for a semi-private room in a nursing home. These numbers reflect the median annual cost of care in the United States. This means that while it may cost less, long-term care (LTC) can also cost much more. Additionally, the odds of needing LTC are great – approximately 70% of people currently age 65 will require some form of long-term care within their lifetime – and that percentage increases with age. The high likelihood of needing care, and the financial toll that brings, is troubling for many people as they age.

Pre-Planning Is The Best Planning

The best protection against paying the high cost of long-term care – whether at home, an assisted living facility, or a nursing home – is to have a long-term care insurance policy. If you purchase the policy when you are young and healthy, the insurance company offering the policy assumes much of the risk, typically making the policy very affordable. However, as age increases and health declines, policy costs will continue to rise to a point where you are no longer insurable: too old (typically anyone over age 80), frail (receiving home health care, assisted living, or nursing home care), or feeble (showing signs of Alzheimer’s or dementia).

How Late Is Too Late?

It may be obvious to recommend LTC insurance to your younger clients, but have you considered the case of a healthy community spouse? Our office specializes in crisis Medicaid planning cases – people for whom long-term care insurance is no longer an option. However, in the case of a married couple, it is not uncommon to see two people in very different states of wellness. Sometimes, the community spouse is quite healthy, perhaps younger, and may still benefit from the purchase of an LTC insurance policy. This consideration may be even more crucial, depending on your state’s Medicaid rules. For example, here in Wisconsin, when a community spouse transfers protected resources in the five years after Medicaid eligibility has been determined for the institutionalized spouse, a transfer penalty is imposed. In effect, this amounts to a 10-year look back period for the community spouse and presents a potential problem when it comes time for their long-term care needs. Assuming the well spouse is indeed well, this may be a perfect scenario for LTC insurance. So, how late is too late? There is no definite answer, but if your client is in good health, despite their age, it is an option worth considering.