Long-term care plan gets thrown off the fiscal cliff
By Mike Anthony
If you’ve got clients who can’t get or afford long-term care insurance and are worried about how they’re going to keep from going over their own personal fiscal cliff when their health deteriorates, you should learn and understand how to protect their future through Medicaid planning. By learning Medicaid planning, you can give yourself a whole new perspective on ways to help your clients and expand your practice.
If there were any question about whether the CLASS Act was a goner, Congress recently made it official. As part of the budget compromise to avoid the fiscal cliff, the CLASS Act was formally repealed and replaced with a long-term care commission.
The CLASS Act was Obamacare’s attempt to create a national insurance pool for long-term care. Part of the plan included a cost review by the Department of Health and Human Services. After the review was done, Secretary Kathleen Sebelius came to the conclusion that the CLASS Act was untenable financially. To support the system, the premiums would need to be beyond what she thought most people would be willing to voluntarily pay. Congress officially agreed and wrote the program’s obituary last week.
For those who can get and afford long-term care insurance, it helps give them the peace of mind of not having to worry about how they’re going to protect their assets if they suffer from a debilitating health condition. But for the rest of the folks, the standard problems are pervasive: The insurance is either too expensive or they don’t qualify for it because of pre-existing health conditions. Without the benefit of a guaranteed-issue government insurance, seniors face their own fiscal cliff. The only way for the uninsured to protect themselves is to seek refuge under Medicaid, but many don’t know how to minimize the sting of the Medicaid spend down. Most don’t realize they can take advantage of government incentives that allow them to protect a limited number of assets and preserve precious resources in case their health later improves or for the benefit of a healthy spouse. With the absence of the CLASS Act, Medicaid planning becomes all the more essential.
Long-term care Medicaid is not a free ride. Through a complex system of rules, there is a cost-sharing element that factors in the applicant’s income and family needs. Sure, they let applicants shift assets like IRAs into income-only annuities without a penalty, but primarily to help support a healthy spouse. In many cases, the shift of assets to income excludes an asset but increases the monthly cost-sharing.
With that said, there are still ample opportunities to help your clients with their asset-protection needs. Medicaid planning is the last hope of many before total impoverishment from the costs of nursing homes. Through creative planning, you can help keep your clients at home or in low-cost assisted living facilities with Medicaid’s assistance through the expansion of the Home and Community Based Services (HCBS) program.
If you’ve got clients who can’t get or afford long-term care insurance and are worried about how they’re going to keep from going over their own personal fiscal cliff when their health deteriorates, you should learn and understand how to protect their future through Medicaid planning. By learning Medicaid planning, you can give yourself a whole new perspective on ways to help your clients and expand your practice. Keep in mind: If you’re giving financial advice to seniors and you don’t understand the impact of that advice in relation to how Medicaid works, you could go off your own fiscal cliff if you’re sued.