Planning Now for Future Long-Term Care Needs
By state Rep. Thomas Caltagirone
No one likes to think about getting older, facing chronic illness or becoming too frail to safely live on their own. But it happens, and when it does, seniors and families often are unprepared, emotionally and financially.
Because of poor planning, long-term care is a leading cause of catastrophic out-of-pocket costs for families. Fortunately, there are steps you can take to protect your assets and ensure a greater choice in long-term care options as you age.
· Long-Term Care Insurance: For many seniors, this is one of the best ways to prepare for care. Long-term care insurance can provide coverage for a full range of services, including home care, adult day care, personal care home/assisted living and nursing homes. It can also help families safeguard hard-earned assets. Be sure to consult a financial expert.
In Pennsylvania, we recently enacted a new law that encourages the purchase of long-term care insurance by allowing residents to protect certain assets. For example, the purchase of $100,000 in a qualified long-term care insurance policy allows residents to keep $100,000 in assets and still receive Medicaid if and when their insurance coverage runs out and they otherwise meet Medicaid eligibility requirements. Information about this new law can be found on the state Department of Insurance Web site at www.ins.state.pa.us/ins, Keyword "Long Term Care."
· Reverse Mortgage: Those over 62 who own their own home can tap into their home equity with a reverse mortgage. Funds from a reverse mortgage could pay for renovations to make the home safer for an elderly loved one,; could provide for home health care, could provide family caregivers with funds for out-of-pocket expenses, or could be used to purchase long-term care insurance.
· Asset Transfers: Some seniors choose to transfer assets to family members so they can qualify for Medicaid. Be aware of new rules. The transfer of assets must take place a minimum of five years before care is needed or Medicaid will be denied. Think about the risks, too. If something unexpected happens, it’s possible to have no assets to pay for care and no Medicaid coverage. The rules on this are very complex, and you need to discuss this with your financial advisor and attorney.
· Retirement Plans: Those over age 50 may want to take advantage of 401(k) or IRA "catch up" contributions. You can shelter additional contributions and build a larger nest egg. Talk with a certified financial advisor who can help you understand how to manage and protect your assets.
These are just a few choices you have. Other options may be available, depending on your age and financial situation. Be sure to consult an expert. But above all, start talking now – husband to wife, children to parents. It may not be an easy conversation, but it’s necessary. For more information about planning for your long-term care, visit the Pennsylvania Health Care Association’s Web site at www.phca.org.
As always, if I can be of assistance with any state-related matter, please do not hesitate to contact me.
Rep. Caltagirone represents the 127th Legislative District in Berks County. His office is located at 645 Penn St., 2nd Floor, Reading. The phone number is 610-376-1529.