Listen to Lawrence answer your Long Term Care Policy Question

October 6, 2020
Dear clients and friends,
Continuing to answer your questions so keep them coming!
Question for Lawrence:
Dad lives with me. He has a long-term care policy which he uses to pay for a part-time aide in the house. This policy has a lifetime limit of $275,000.00 and a daily limit of $265.00 a day of which he comes nowhere close to using. He cannot use it for supplies. Is there any benefit to giving up the policy & having him go on Community Medicaid & what happens to the policy if he does?
Thank you.
My Response:
I cannot see any benefit in giving up the policy. Here are some reasons:
  1. What does it cost to keep the policy? Probably nothing, since these policies typically call for a waiver of premium if you are accessing the policy benefits.
  2. While you may not be using much of the policy this week, your father’s need for home care may increase in the future, perhaps beyond the amount that Medicaid would authorize.
  3. While you may not be thinking about it right now (and swear it will never be an option), the policy will pay for an assisted living facility, while Medicaid generally will not.
  4. It is no longer easy to get on Community Medicaid because of the new 2 ½ year look back.
  5. It is very possible that the $265 per day is not lost even if you do not use it. Usually, these policies are capped at the $265 per day but ultimately you have a pool of $275,000 to spend, if not now, later.
I hope this helps! Please forward this information to your friends and relatives.
As always, please send me your questions. If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.
Let’s stay connected.
Stay safe!