Using a Hybrid Approach to Long Term Care

April 27, 2020

In many areas in and around Baltimore, nursing-home care ranges between $9,000 and $13,000 per month. This can drain a life savings very quickly causing many seniors to attempt to “age in place” as long as possible, meaning they attempt to stay in their home with health care aides.

Long-term care insurance (LTCI) and the Medicaid Asset Protection Trust (MAPT) are ways to address these soaring long-term care costs. Often viewed as either/or options, using a hybrid approach may be a better alternative.

Long-term care insurance protects both income and assets from the costs of long-term care. It is a form of self-insuring and is typically purchased when one is younger and healthier in anticipation of getting older and needing long-term care. When needed, the insurance will pay for health aides in the home.

Depending on the benefits of the policy, long term care insurance may also pay for assisted living and nursing-home costs. The downside is that long term care insurance is expensive and requires passing certain health assessments to qualify.

Another option for planning for long term care needs is a Medicaid Asset Protection Trust (MAPT) that protects assets from going to nursing-home costs after the assets are in the trust for five years. Once the time limit passes, you may then apply for Medicaid to pay for nursing-home costs.

However, unlike long term care insurance, the trust does not protect your income. Medicaid income rules determine how much income you keep.

Now for the hybrid approach: buy some long-term care insurance and also create a Medicaid Asset Protection Trust. Factors that help make the decision regarding the hybrid approach include the daily benefit of the LTCI, the maximum lifetime payout, if there is an inflation rider, and other assets and income that could supplement the insurance. For more information on this strategy and how to best apply it to your situation, contact the experienced Elder Law attorneys with Stouffer Legal at 443-470-3599.

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