When drafting an estate plan, many people forget to account for long-term healthcare. Though individuals may be in good health now, those aged 65 or older have a 70% chance of needing long-term health care. Without a plan to cover these costs, people risk losing their estate.
People can fund their healthcare costs in several different ways, but the best approach is long-term planning.
Methods to cover healthcare costs
Long-term healthcare can cost upwards of $8,000 every month, depending upon the need. Even a daily in-home nurse cost around $4,000 a month in 2016. Since then, these prices have only increased, especially for those with pre-existing conditions. Adults can approach these costs in a few different ways:
- Medicare: This federal aid program offers emergency medical care, even including a stay in a nursing home. Medicare offers limited coverage, so this is a temporary solution at best.
- Medicaid: This state and federal aid program serves low-income populations. Medicaid is comprehensive in its coverage but offers limited options. To qualify for Medicaid, an individual may have to liquidate much of their estate to meet the income threshold, leaving few remaining funds.
- Long-term health insurance: These plans have decreased in popularity due to their high cost. Many states prohibit their sale. For those who purchase these, bear in mind that the insurance company will keep the benefit if it is not needed.
- Living benefits policy: Living benefits policies evolved from long-term insurance. These plans combine health and life insurance into one package. Policyholders can take out money to cover healthcare costs and any money left pays out as a life insurance benefit.
- Asset-based policy: These policies pay out of a lump sum of cash from the policyholder. Investing early and with a high amount will provide policyholders with the highest value payout. Policyholders can withdraw their cash at any time.
Seek legal counsel for more options
Determining which option is right for you can be difficult on your own. A local lawyer familiar with Texas estate planning can help answer questions and discuss options. An attorney can help negotiate terms, navigate dense insurance paperwork and file disputes.