A National Membership Organization

Long Term Care

Long-term Nursing care is clearly one of the top concerns of seniors since they are fully aware that unless they have a plan in place to address this problem, they are likely to lose most, if not all of what they own.  As we have mentioned previously, Medicare states at least 70% of people will need long-term care before they die, and most seniors have not addressed how to deal with this problem.  Why?  We believe it is because seniors have been told they must choose between one of two plans as they face this dilemma, and they are not happy choosing either of one of them.  

The odd thing is, it is the third option that most seniors wish they could find.  The remarkable fact is the plan exists, it is cost effective, and it is available to them if they would only talk to the right person.  To understand each plan or option, let’s review each one.

There are however, three plans for seniors to choose from as they contemplate the long-term care issue.  Unfortunately, there are not many people in the financial services industry that know plan three even exists, much less have a way to offer it to their clients.  

It is an easy choice among the three plans, and we can help provide solutions 


Plans 1, 2 & 3


Plan 1

  ...is to ignore the problem and do nothing (commonly called the self-pay program).  This is the most popular choice because in excess of ninety percent of seniors have this plan according to the National Bureau of Economic Research.  To be fair, plan one is not what seniors choose or want, they just default to this plan when they don't qualify for or can't afford plan two.


The self-pay plan works just like it sounds.  The individual does nothing and prays they will not be one of the 70% that needs this form of care.  Most people can do the math.  They know the odds are great that they will need care at some point in their lives.  They know their financial status, and they know a nursing home will cost in excess of $6,000 or more each month should they ever need care.  Most families can see within a year or two everything can be lost paying for care.  This is not what seniors want.

Plan 2

...is a plan that many seniors can't qualify for and most can't afford.  The financial obligations of plan two, along with being rejected due to health reasons, are why less than ten percent of people today have plan two.  Plan two is when the senior buys a long-term care or nursing home insurance policy.  

But there are other issues associated with plan two that must to be mentioned.  The first issue is that insurance plans still require the individual to pay out-of-pocket expenses which the insurance policy does not cover.  Even when a good insurance policy exists, the out-of-pocket expenses the policy does not cover can still financially ruin a family.  Here are examples of expenses a policy will not cover.

The elimination period.  To lower premium costs, individuals commonly purchase policies with longer elimination periods of 60, 90, 100 days and sometimes more.  An elimination period is the initial period of time where the insured must pay all of the costs of their care.  The insurance policy will begin paying after that initial period.  Many believe Medicare will pay the costs incurred during the elimination period but in most cases, Medicare covers only limited portions of the cost.  Medicare will only pay if you meet all of the following qualifications.

  •  You must have part A of Medicare and have days left in your benefit period.  The benefit period begins the day you are admitted as an inpatient in a hospital or skill nursing facility.  The benefit period ends when you have not received any inpatient hospital care or skilled nursing care 60-days in a row.
  • You must spend three full days in a hospital receiving inpatient care.  Outpatient care while in the hospital does not count as one of the three days needed to qualify.  Observation services do not count as part of an inpatient stay.
  • You must enter the skilled nursing facility generally within a 30-day period from leaving the hospital and the skilled nursing facility must provide skilled care related to the reason the patient was in the hospital.
  • Your doctor must conclude that you need daily skilled care given by skilled nursing or rehabilitation staff.
  • The nursing facility must be a skilled nursing facility.
  • Medicare will cover the first 20 days in full for each benefit period.  
  • Days 21 to day 100, Medicare will cover all costs minus a $152 co-insurance amount paid by the patient.
  • After day 100 the patient pays all costs.

A short fall in daily benefits.  Once again, with the goal of lowering the cost of the LTC insurance premium, the individual will often purchase a smaller daily room benefit than what a typical nursing home will charge.  Such as, the individual may purchase a $150 per day benefit knowing the average cost for care is in excess of $200.  The difference of what the policy pays and the rate the nursing home charges must be paid by patient.  

Further, the future costs of nursing home care often grow faster than the benefit increases provided within an insurance policy (if any exists).  Years down the road as the true cost of care increases, the spread between what is charged by a nursing home and what the policy will pay often widens.  Again, the out-of-pocket costs can be significant.

Excess Care.  When extra care is needed, the cost for this special care is rarely covered by the long-term care insurance plan.  In the past, this has added thousands per month to the cost of care.

Plan 3

 ...our US Government created laws that allow you to arrange your assets in such a way as to make them an "excluded resource" or unavailable and ignored should you need long-term nursing care.  In other words, this process allows you to qualify for government benefits without the need to first spend down your assets.  This process is not some unintended loop hole that some high-priced attorney found and is making it available to the public.  Laws were purposely written allowing this process to happen.

This process is not unlike income tax or estate planning. In the process of tax planning you apply for all the legal deductions available to you under the law.  The result is that hopefully, you lower your tax obligation to the smallest amount possible.  This permits you to keep more of your assets.  The same thing occurs during the estate planning process.  With planning, families can eliminate the expense of probates, certain taxes, fees and other expenses which can save wealthier families hundreds of thousands of dollars which then can to be passed to their heirs.

Plan three is a highly cost-effective way to keep a nursing home from getting your assets.  When people learn that plan three exists, and they learn and understand the facts of plan three, it is an easy choice vs. plans one and two.