Estate plans must include long-term health care

| Jun 29, 2020 | estate planning |

The Baby Boomer generation is finally reaching retirement age. These older Americans, bolstered by medical advancements, could enjoy two to three more decades of life.

Despite progress in minimizing the health problems that come with old age, 70% of people over the age of 65 will require some form of long-term medical care. It is essential to design an estate plan that considers these expenses.

The growing costs of long-term care

End-of-life care can get expensive. A study performed in 2016 determined that monthly expenses for in-home care were nearly $4,000. Nursing homes can cost up to $8,000 a month. Since the study’s publication, these prices have only increased. Individuals reaching retirement age must include these costs into their estate plan.

Seniors can cover long-term health care costs a few different ways:

  • Medicare: This government aid program can offer immediate, skilled care, but in limited capacities. Additional care beyond that comes out of pocket.
  • Medicaid: Anyone below a certain income level can qualify for Medicare. Retirees will likely have to liquidate much of their estate to qualify. Medicaid limits people’s choices in care and will likely reduce an heir’s share of the estate.
  • Long-term care insurance: As insurance rates have increased, fewer people purchase these expensive insurance policies. These policies also require that their customers need care before receiving benefits. If a policyholder does not use the benefit, the insurance company keeps it. Many states do not offer this insurance.
  • Living benefits policy: Some insurance companies combine life insurance and long-term care insurance policies. Customers can receive benefits if long-term health care concerns arise. Anything left in the policy pays out as a life insurance benefit.
  • Asset-based policy: These policies include a maturing investment on behalf of the policyholder. The insurance company will cover costs upon request, allows policyholders to recover their investment or even pay out death benefits.

Legal counsel can answer questions

Those looking forward to retirement will enjoy their time more with a comprehensive estate plan covering long-term care medical costs. Retirees with questions about how to improve, or start, an estate plan can reach out to a local attorney.

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