Second critical mistake (and solution) in long term care planning

You can read the first mistake — assuming that long term care will not be needed — and now we are going to look at the second mistake.

Second Mistake: Not having a plan to pay long-term care

If you do not have a plan to pay for long-term care, then if you ever get hit with a situation where you need long-term care, the odds of being successful go way down. It could be that you just get lucky and you happen to have enough money in the bank, or you just happen to be able to qualify for Alabama Medicaid or the VA Pension or whatever it may be. But the fact that some people can be lucky doesn’t change the fact that if we do not plan, then we’re really limiting our chance of success.

You can think about that in any context – your career, your children. Whatever it is you’re thinking about, you need to have some type of plan to say, “Here’s what I’m doing.” When you wake up in the morning, you have a plan. Are you going to work? Are you having fun? What are you doing? You have a plan to know what you’re doing.

“So how can I pay for long-term care?”

There are four elements in a plan that we can look at:

• Private pay

That’s just where we reach in our pocket and pay. I’ve got folks that stroke a check every month to the nursing home, $6,000-$8,000 a month. Some people are in the position where they can afford that – not just for a few months, but years and years and years. So that’s a plan if you are fortunate enough to be in that position.

• VA Pension

This is for wartime veterans who are now needing help with the activities of daily living – dressing, bathing, eating, going to the bathroom. The benefit can pay up to $25,000 a year.  It’s also available for surviving spouses. That can be a plan. That can provide the money, combined with your other money or income to pay for long-term care.

• Long-term care insurance

This could be a wonderful plan. If you get a policy from a big company like New York Life, you can get a policy that pays $150 or $200 a day. That gets you pretty close, maybe all the way covering even a nursing home combined with Social Security or other income that you have. The right type of long-term care insurance can even pay for care at home or in an assisted living facility. That can be part of the plan.

• Alabama Medicaid

Medicaid is what most people use in Alabama, and really across the country to pay for nursing home care. As a practical matter, Medicaid is not paying for assisted living or home health. We’re talking about the long-term care of those in nursing homes. That is an option. That is the way to pay for this.

So what is the solution?

Solution to Second Mistake: Have a plan

Some plans are better than others. Sometimes we don’t have the perfect plan, but we have the best plan for us.

We look at it and say:

• “If my plan is that I privately pay, do I have enough money?”

• “I think I can get the VA Pension. Am I a wartime veteran or a surviving spouse of a wartime veteran and do I qualify? Do I meet all of the requirements? Will that give me the money that I need?”

• “How about long-term care insurance? That can be a wonderful plan.”

• “What are the requirements for Medicaid, and what can I do right now so that if I need long-term care in the future, I’ll qualify?”

And it does not have to be that you have to pick only one of these. You may do all of these. I have clients who say, “We’ve got this kind of money coming in. We get the VA Pension. Now we do have a long-term care insurance policy. It might not be a really good one, but if it pays for half of it, that’s better than nothing. Then we can put this plan together and then at the right time, we will qualify under all the rules of Medicaid for Medicaid to pay the nursing home bill”.

These are the four elements. Some of us are not wartime veterans, so the VA Pension is not an option. But we can do what we can with what we have. The critical part is to make sure you do have a plan and that you have thought it through carefully – the advantages and disadvantages.

Sometimes, though, if we don’t have the simple essential estate planning legal documents we may not can make our plan work the way we want it to….  this will be the third mistake we look at next.

Next Step To Take

We will be continuing this series and will work our way through these five common mistakes.  We hope you will enjoy reading these and more importantly that you will think about this and take action.

There are all different ways to take action and you have to decide what is best for you.

If you would like more information or if you want some guidance from us, you can call our office at205-879-2447 or fill out our online contact form to do any of the following (assuming you or your family live in Alabama):

• Set up a phone conference or video conference
• Set up an in office consultation
• Request our free information packages on long term care planning, including Alabama Medicaid and the VA Pension.

Thanks for reading this and feel free to share this article and to put any comments you have below.