Long-Term Care Series

Welcome to Merit Money matters. This is part three of our long-term care series. My name is Marcus Anderson, partner and wealth manager at Merit Financial Advisors. In this video, I’m going to break down the most common ways people can financially prepare for the eye-popping costs of long-term care services and facilities. So come along with me and let’s get into it.

Okay. So there are basically four main ways to be able to pay for these costs. Number one: personal savings, government programs, traditional long-term care insurance, and then, the most recent addition, which is the hybrid long-term care insurance. So first up: personal savings. Well, this is kind of self-explanatory so let’s just jump into the second option which is going to be government programs.

Now, there are programs specifically designed for veterans and for people with either no or very low income that may be eligible through the VA or Medicaid. That’s important to know that Medicare does not provide benefits for long-term care. Only limited short term benefits. Now, Medicaid rarely covers home health care, adult day care, assisted living, and even respite care, and it only provides for nursing care.

Now, many places do not even accept Medicaid, and if they do, it will most likely be put on a waiting list. So since Medicaid is run by the state, rules and benefits will vary widely. So normally you will need to spend everything down to nothing and then not have given anything away in the past five years, with exceptions from a couple of states.

Now, the third option is traditional long-term care policy, where you would select the amount that you want covered, how long you want it for, or to last, and then how long you must wait before first receiving the benefits. So typically you would pay an annual premium for life and they can basically raise the premiums, and they typically do, throughout your coverage.

So nowadays, many people elect to use the fourth option which is a hybrid long-term care insurance. Now this is when you actually merge life insurance, investments, and long-term care benefits into one policy. Now these policies allow for different scenarios. It’s life insurance in case you don’t use the long-term care benefits, essentially giving back your estate the money you paid into the program.

And then many also allow you to just change your mind and get you a refund, but not usually the entire dollar amount. Now, you can also choose to get a fixed or a variable benefit using investments. Now in the fixed investment option. The longer you allow the policy to mature, the larger the benefit’s going to be. In the variable.

you have the potential to get actually a lot larger benefit, but also potential to get smaller ones, at least versus the fixed option. It all depends on how the investments are formed and what kind of guardrails are put into that specific policy. Now to recap, there are four ways to pay: personal savings, government programs, traditional long-term care, and hybrid long-term care policies.

Now, these policies can get very complicated and they have a lot of bells and whistles, and I would highly recommend that you speak with a reputable financial advisor to see what the best option for your situation would be. Now to learn more, join us online and our community by following us on social media and subscribing to our email newsletter.

Thank you for joining Merit Money matters. My name is Marcus Anderson, and it’s been a pleasure guiding you through our topic of long-term care.