Thursday, January 24, 2008

Case Study: Can We Help This 87 Year Old Preserve Her Estate?*

What options does a family have when their 87 year old mother, who requires help with 4 Activities of Daily Living (ADL’s) due to Dementia, has no Long Term Care Insurance, but has $500,000 of “countable assets” (a Medicaid term) which her family knows they must use to pay for her care?

Her income from Social Security and a pension left by her husband totals $2,500 a month. And, oh yes, her nearest child lives 500 miles away.*

Can anything be done to preserve her estate? Quite likely. We may be able to preserve a considerable portion of her estate and still guarantee a lifetime of income sufficient to pay her Long Term Care bills.

First of all, we can rule out Medicaidas an option, since it will take several years for her to “spend down” her entire estate to become eligible. But, with Dementia, patients can survive for many years. If nothing is done and the estate gets close to its vanishing point, we can look into possibly preserving a small portion of it and still qualify for Medicaid – depending how much further Congress reduces benefits in the future.

But for those who want to preserve the family’s lifestyle, and perhaps continue home health care as long as possible for their loved one, there is a unique product that can help. It is a special type of Immediate Annuity that adds two distinct features: (1) it considers not just the age, but also the health of the annuitant when it determines a payout, and (2) for an additional premium it offers a guaranteed return of all or a portion of that premium paid, as well as the benefits received, on the death of the annuitant. .

Here is how it could help this hypothetical family:
1. On the base policy, for a premium of $182,400, this lady would receive $4,000 per month, guaranteed for life. This would effectively insulate the balance of her estate from the dreaded “Medicaid Spend Down” if she lives a long time.
2. For an additional premium of $43,275 (total then would equal $225,675), there would be a return of 75% of the premium (being $169,250) plus benefits received if she died in the first year and 50% of the premium ($112,837) plus benefits received upon death any time after the first year.

Too often in the past, I have conducted “The Dreaded Medicaid Meeting” with the spouse and children of a loved one who needed care and did not have LTC Insurance to cover the costs. It was a time of futility and frustration because decisions (or non-decisions) were made and now there was little to do but shift a portions of the assets as allowed by law, as the loved one's estate evaporated.

But with products such as that outlined above, and assuming the family's circumstances fit the needs, I now have an option that will avoid Medicaid and still protect the much of the estate. It could assure that their loved one will be able to get care at home as long as physically possible. That’s because when on Medicaid, home health care is not an option. It is nursing home only. In order to succeed with this strategy, the major criteria is that the loved one has enough assets to protect and that the assets are sufficient to cover the costs of care needed. With that confirmed, the family could look seriously at this strategy.

I can’t stress enough that the "facts" described here are made up, even if the numbers for those “facts” are real. If you have a specific situation for a loved one, the premium options and benefits can only be determined by providing a complete personal and medical profile.

If you would like to learn more about this, please call for a no-obligation conference.

*This is a hypothetical case study based on the above fictional circumstances. The writer has added certain assumptions that he believes may be typical of someone in this situation. But since this is purely hypothetical, nothing herein should be considered to apply to any paticular individual. Each case and each personal situation is different and a determination of premiums and benefits would be specific to that situation. This is strictly for illustrative purposes only.

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