So why do you want a GOOD person reviewing long term care insurance with you?  See the email I received from a financial advisor below.  I think she forwarded it on because she knew her clients were not getting the best advice from her inhouse "expert."  (This is not the advisor’s email, but rather an email from a so-called long term care insurance “expert” reviewing the advisor’s clients’ circumstances.  My comments are in RED.)

If her husband can’t get a LTC policy, and has no life insurance and can’t get that either, and [they] need to pay for his care out of pocket, at that point you would want to consult a very good elder law attorney.  The consultation should be NOW before a crisis hits.  Options narrow when Medicaid planning involves nothing but a reaction to a tragic event.

Usually but not always, a healthy spouse can more easily provide care for the unhealthy spouse at home, provided healthy [spouse] is smart enough not to try to do it all themselves, don’t become as sick as the uninsurable; caregiving 24/7 wears a person down.  The translation here is that home services should be hired; the reality is that often the person needing services refuses to allow “outsiders” to come into the home.  Options should be explored, or at least discussed, before the need arises.  If a diagnosis of a degenerative condition has been received (i.e. Parkinson’s) there is significant planning that can be done, often with specialized care available.  In this example, one of our local home care agencies (HCR) even has a special program for Parkinson’s.

Life insurance can be utilized to “pay back” the estate once the unhealthy spouse who needed care dies.  In the Medicaid context the cash value of life insurance owned by either spouse is included in the calculation of resources.  Clients are often forced to take loans against the cash or even cash in policies.

If Mrs. N. is the one who needs care, the NYS Partnership protects not only her assets but all those belonging to her husband, even if he doesn’t have a policy.  That’s because Medicaid as it exists today lumps together all assets belonging to husband and wife, so it doesn’t matter whose name the asset is in, no point in moving everything from him to her, in other words.  This is just wrong.  While the partnership policies can protect all assets if structured appropriately, assets must still be transferred out of the applying spouse’s name.  And there is a limit on the non-applying spouse’s assets if she is the “community spouse.”

NY presently has what’s called “spousal refusal” meaning a spouse somehow gets her spouse into a nursing facility (no way around laying out some money here) and then after a couple of months of paying out of pocket, refuses to pay anymore.  This is a gross misstatement of the law and how it works.  “Spousal refusal” refers to a non-applying spouse refusing to make his or her assets and income available to the applying spouse, as required under New York law (spouses must support each other and cover each other’s medical expenses).  The refusal takes place at the time of the Medicaid application, not at the time of a nursing home admission.  Nursing home admissions frequently arise in the context of rehabilitation services following a hospital admission, which can result in Medicare covering the initial costs of the nursing home stay.  It is not automatic that there will be a couple of months of out of pocket expenses paid by a couple.  

And then there’s always divorce, but you can’t divorce an incompetent person, plus the courts are going to divide assets anyway – equitable distribution, they won’t allow one spouse to have everything just to avoid paying the other spouse’s nursing home bill.  Divorces CAN be carried out through a guardianship if one spouse is incompetent and there are a number of judges who are sympathetic to Medicaid planning.  That being said, divorce is usually the last choice.  In more than a decade of Medicaid work none of my couples have ever been forced to divorce – yet.

There’s always a Medicaid trust, again, requires a very good elder law attorney, there’s a 5-year look-back, always an option, and one spouse having LTCI, especially with the daily benefit she’s applying for, would be really helpful if a trust is the choice.  Finally – I agree with the need for a skilled elder law attorney.  Options should be explored early and reviewed every couple of years.  If an irrevocable trust is used (incidentally the only kind of trust that is useful for Medicaid planning) the terms must be strictly followed and only suitable investments included – NO ANNUITIES INSIDE A TRUST EVER.  But that’s for another discussion about the dangers of annuities…to be continued.

So what is the lesson to be learned from this?  You need to arm yourself with knowledge and only use trusted advisors like Susan Suben, from Long Term Care Associates, who only focuses on long term care insurance and teaches it to other long term care professionals.  If you are meeting with a long term care insurance person get multiple quotes and ask them what they know about the interplay of long term care insurance with Medicaid.  Better yet, sit down with a reputable elder law attorney AND your long term care insurance person.  Those who know what they are doing welcome the opportunity to meet your elder law attorney and elder law attorneys are happy to involve your financial team in your planning – as long as your advisors are not recommending annuities.