Higher premiums for long-term care policies have retirees wondering how they’ll protect their nest egg.
Wealthy couples may be in a position to easily cover $10,000 a month or more for private care. But what about the couples who have diligently saved and accumulated just enough to cover their monthly living expenses? They could be wiped out financially if either spouse needs long-term care. An even greater concern: what will happen to a surviving spouse, financially speaking, if the liquid assets are used up providing care for an ailing spouse?
Options exist to help protect the nest eggs of those with limited resources. Learning about these options and understanding the rules that apply is best done when conditions are calm. Unfortunately, becoming Medicaid eligible rarely crosses the minds of retirees until a crisis arises.
One option is a Medicare compliant single-premium immediate annuity (SPIA). This option, if allowed in your state, will help the spouse living at home preserve assets to provide for his or her monthly living expenses.
Here’s the basic concept. Mr. and Mrs. Jones find out that Mr. Jones needs long-term care. Under Medicaid rules, Mrs. Jones is only allowed a certain amount of assets, not including the family home. Everything over the allowed limit is transferred to a Medicaid compliant SPIA thus converting the asset to an income over her life expectancy, usually a five- or six-year period.
By the time the SPIA has paid out in full, Mrs. Jones will have sheltered the assets to create a much needed income. Should Mrs. Jones die before her husband, the proceeds from the SPIA will go to cover his care.
This option is not designed to shelter assets for beneficiaries, but rather to maintain the standard of living for a healthy spouse.
For more information contact one of Smedley Financial’s wealth advisors who can answer any questions you may have and help determine if this option is something you should consider.