3 ways to cover long-term care costs when estate planning

On Behalf of | Mar 13, 2024 | Estate And Probate Law |

Aging is a privilege, but it is also a process fraught with personal challenges. Older adults experience numerous changes in their health ranging from a reduction in strength and flexibility to a change in their center of gravity. Some people experience decreased mobility later in life, while others might struggle with cognitive decline. All types of different age-related health issues can prevent someone from safely living on their own in their golden years.

Many older adults eventually require the support of long-term care. Modern long-term care options include moving into a nursing home or having medical care providers regularly visit someone’s home. Those long-term care expenses can add up to thousands per month.

How can people plan to cover long-term care costs as part of the estate planning process?

With the allocation of retirement funds

Those who have saved particularly aggressively or who have enjoyed generous returns on their retirement investments may be able to plan to pay out of pocket for long-term care costs. They may need to set aside a certain amount of their retirement savings to pay for their long-term care needs later in life.

With long-term care insurance

As people start thinking about retirement and their support needs and their golden years, they may realize that savings may not be enough to cover those expenses. Those still in their 50s and ’60s might want to consider purchasing long-term care insurance coverage. These policies can provide a fixed amount of financial support if someone ends up moving into a long-term care facility. Typically, acquiring the coverage earlier in life allows someone to secure lower overall premiums for the coverage they may require.

By Medicaid planning

Long-term care insurance premiums can be quite expensive. Some people have neither the funds to budget for long-term care coverage nor the resources to pay for care out of pocket. These people may need to start planning for a future Medicaid application. Medicare only offers limited coverage for long-term care or rehabilitative services. Medicaid can offer better coverage, but there are hurdles to qualifying. Those who plan several years before they apply for benefits have the best chance of getting coverage when they need benefits the most.

Looking into different options for covering future care costs can be a crucial component of modern estate planning. Seeking legal guidance is a good way to get started.

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