Golden Years? Part Four in a Series

Part four of a five-part series detailing a personal journey into planning for the later years of life precipitated by my father-in-law’s abrupt move to a personal care home.

Health Considerations 6/7/12

In addition to dementia, Dad has macular degeneration. This alone would have necessitated a move to personal care. He’s had the condition for over 15 years. Although not curable, his daily regimen of vitamins has slowed the progression of the disease. Degenerative diseases can take a huge toll in retirement. According to the CDC, the leading cause of disability in the United States is arthritis. Heart disease and cancer are close behind. Look at your health history for areas of concern. If you have a family history or past precursors of these types of diseases, the time to plan is now. Make sure advance directives are in place and up to date. A living will details your wishes concerning end of life medical intervention. A health care proxy or durable power of attorney allows you to appoint an agent to act on your behalf. For free, state-specific advice you can visit

If you are still in your working years, think about disability insurance. Such insurance will protect your assets if you are disabled for an extended period of time. If you are nearing the end of your working years, consider long-term care insurance. Premiums on long-term care insurance are typically pricey. A physical is required and acceptance is not guaranteed. Analyze the cost vs. benefit of such a policy. According to Consumer Reports Money Advisor, only those with assets between $200,000 and $2 million should enter into a long-term care policy. With a net worth below $200,000, you may find it difficult to afford the premiums for a benefit you may never use. Those with a net worth above $2 million can usually afford pay for their own care; but may want to preserve assets for heirs.

The average stay in a care home is three years. This is also the typical benefit period of a long-term care policy. Looking at the numbers, my father-in-law’s care for that period will cost approximately $137,000. That is just personal care; skilled nursing care would cause that figure to triple. Factor that with the cost of premiums. The “sweet spot” for affordable premiums is usually considered age 50-62. For an inflation-adjusted policy for an individual age 62, we found a low-end quote for $1,880/year. If you enter a care facility at age 85, you would have spent $43,000 in premiums. It sounds like a lot, but it is less than one year of care.

As the insurance industry evolves, more options are becoming available. There are hybrid policies that combine long-term care insurance with life insurance. Additionally, there is now a state certified partnership program that will protect a portion of assets equal to the inflation-adjusted value of the policy. This program will ensure that even after your benefit is exhausted, and you find it necessary to apply for Medicaid, those protected assets will not be considered in determining Medicaid eligibility.

Medicaid is the federally-sponsored, state-administered health insurance. Created for low-income residents, exploitation of the system has become so widespread that there is now a five-year look-back period to determine eligibility. If you or your spouse have gifted or otherwise disposed of assets in the past 60 months, you can be deemed ineligible or subject to complicated payback procedures. If your assets are such that you may eventually need Medicaid, look to titling assets in trust or gifting well before the look-back period. But let’s be realistic, do you really want to give away assets and be dependent on a state bed in a nursing home?

Dad had no long-term care insurance. We estimate he has funds to pay for personal care until age 100. After that, he may need Medicaid. His personal care home accepts Medicaid and will allow him to stay. If you think you may ever depend on Medicaid, make sure your care home will accept it. You don’t want to pack up and move out at age 100.

Final Installment – VA Benefits

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