Financial Fitness February: Long Term Health Care Insurance

We spend our lives working to enjoy our golden years. But one diagnosis can wipe it all out, if you're not prepared. Should you protect yourself and your family by investing in long term care insurance?

Marie Papciak lost her beloved husband Jerry last December. A six year battle with Alzheimer's took his memory, his personality, and the couple's plans for the future. Papciak said, "We had made many trips to Maui to Hawaii, you know and we had planned on making more trips there." But those trips are nothing but a dream now. The reality of a devastating diagnosis not only stole Marie's husband, it created a new financial landscape she didn't expect. She took care of Jerry herself at home as long as she could. She said, "Six years and it did get harder, and my health was suffering."

Jerry needed around-the-clock care and didn't have long term health care insurance. Marie said, "It would have been a lot easier, especially towards the final stage." Long term care insurance isn't cheap, but neither is the alternative.

Karin Gyger, Insurance Resource Specialist with Michigan's Dept. of Insurance & Financial Services said, "Right now the average in Michigan if you need home care or assisted living care, that's going to run you $50,000 a year. And if you need nursing home care, that could run you around $100,000 a year for that care."

Long term health insurance will help cut down the cost and protect your assets. But there are so many different types of policies out there, it can be confusing to know what you'll get when you need it. The prices are all over the board depending on your age and how healthy you are. Attorney Melisa Mysliwiec, Fraser Trebilcock Law Firm, said, "There's a big difference between getting a hundred dollars for help with care at home, versus paying privately in a nursing home which might be $250 of $270 dollars a day. So you really want to look at how much you can get per day and then there's usually a cap on how many years it will pay out too."

Mysliwiec helps people prepare for the unexpected. She says the best approach involves a team of experts you can trust. "We don't know if we're going to get Alzheimer's or anything like that. I think the best thing is to have your team of advisers you know, 30's, 40's 50's, is a good time to meet with an attorney, get estate planning documents put in place so there's someone to act on your behalf if you become unable to."

If that's not an option, and you can't afford long term health care insurance, Medicaid has a program. But you have to meet an asset and income test. Gyger said, "Medicaid is going to expect that you pay out of pocket to the extent that you are capable of, and then once you have spent down all of your assets, then medicaid will cover the costs of long term care in certain facilities."

That's how Marie was able to get Jerry the care he needed in a nursing home. She worked with an elder attorney to separate their incomes so he would qualify. She said, "Still, it takes a while. It's still out of pocket for a while before it starts working, but it eventually did."

It's important to note, many Alzheimer's patients live long lives, and there is usually a cap on the number of years long term health care insurance will pay out. In many cases, it is not enough and patients will eventually have to rely on Medicaid.

Marie says she doesn't know what she would have done without support from the Alzheimer's Association. We've included several links with this article.