Long-Term Care Insurance: Worth it?

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Long-term care insurance is not the end-all and be-all solution for long-term care planning.

The reality is long-term care insurance can be expensive. For many, premiums are paid for decades, when the likelihood of care is quite slim. The financial strain of premium increases can become a real problem with age, which often leads to cancellation out of necessity.

Insuring with a purpose…

Many long-term care insurance hybrid products have emerged, but they come with a price like any insurance. If these products were great “investments” for all, the insurance companies would be out of business. The predominant purpose of insurance is to mitigate risk, not to build wealth. It may make sense to venture into the long-term care insurance arena depending on the circumstances, but it can be wholly unnecessary for many. Considering the cost, benefit, potential tax efficiencies, alternatives, and how such a product fits your overall financial plan is essential.

If you decide long-term care insurance is right for your situation, verify whether the product is “Long-Term Care Partnership Program” eligible. You may exempt your estate assets up to the total value of benefits paid if eligible. This is irrespective of traditional Medicaid asset eligibility and estate recovery rules!

There are options…

There are options for those who have decided long-term care insurance is not suitable for them or cannot obtain it! [seeWho has 5-years? #MedicaidPlanning”]

Medicaid planning comes in two forms (i) prospective planning and (ii) crisis planning.

Prospective planning is done to plan for the possibility of long-term care in the future. This typically includes establishing an estate plan (whether Will or Trust based) that further provides the “tools” needed to conduct crisis planning – the single most important being a well-drafted durable financial power of attorney [seeThe ‘Powerless’ Power of Attorney”]. Certain assets can (and should) be protected prospectively depending on the circumstances.

Crisis Medicaid planning is done at the time of need for long-term care. There are several planning techniques to protect a significant portion of any given estate, whether single or married. And in many circumstances, when considering if you invested what you would have paid in premiums, the outcome can be equal to or greater than those with long-term care insurance!

If you already have long-term care insurance, prospective and crisis Medicaid planning can further protect your estate and obtain Medicaid benefits sooner than simply relying upon your policy.

Worth it for some, but not all…

Long-term care insurance does have its time and place for some – but is not the end-all and be-all solution for long-term care planning.


Attorney Joseph C. Jones advises clients on estate planning, asset protection, business law, and real estate law matters. Joe can be reached at (906) 914-4181 or joe@joneslawplc.com. Jones Law PLC is a Michigan & Wisconsin based provider of legal services.

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