Don't Forget About the Community Spouse

DE PERE, Wis. - April 3, 2013 - PRLog -- As an elder law attorney, you know that it is relatively easy to qualify an institutionalized spouse for Medicaid benefits by converting the excess countable resources into monthly income for the community spouse by way of a Medicaid Compliant Annuity.  But what happens when the community spouse needs to qualify for Medicaid benefits as a result of a nursing home stay?  The spouse could proceed with a Gifting/Medicaid Compliant Annuity plan (commonly referred to as half-a-loaf planning).  Is there a better plan? Yes!

Assuming the community spouse was insurable at the time that the institutionalized spouse qualified for Medicaid benefits, he or she should have acquired a long-term care insurance policy ("LTCIP").  The advantages of having a LTCIP is that the community spouse could pay for home healthcare, assisted living, or nursing home care without using up to 50% of his or her life savings (such as in half-a-loaf planning) or needing to qualify for Medicaid benefits.  In short, a LTCIP offers the community spouse and his or her family greater flexibility and peace of mind when dealing with long-term care needs.

What could a community spouse expect to pay for LTCI? If the community spouse was a 65-year-old female and wanted a LTCIP that paid three years' worth of benefits for home health, assisted living, and nursing home, at $150 per day with a 90-day elimination period (no benefits are paid during the first 90 days), 5% annual inflation factor (the daily benefits increases annually by 5% - year two the per diem is $157.50, year three it is $165.37...), the annual premium would be $2,494.57.  If she was 70 years of age at the time of purchasing the same LTCIP the annual premium would be $3,911.81.  At 75 years of age the annual premium would be $6,145.18.  If she were 79 years of age, the last year possible to purchase the LTCIP, the annual premium would be $9,194.85.  All in all, the cost of the LTCIP is insignificant in light of what she would lose if she waited and needed to qualify for Medicaid benefits, not to mention that she could maintain her long-term care needs at home or in an assisted living facility - the preferred choices.