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Long-Term Care Insurance

Protection Against a Lien and Estate Recovery

Long-term care insurance has only been available in the last couple of decades.

It has become much more common and will continue to be so as the baby boomers age.

The policies generally cover nursing home costs as well as home care, assisted living, adult day care, respite care and hospice care. An LTCI policy must have a daily benefit of $125 to protect a policy owner’s house from a lien and his/her estate from the MassHealth debt incurred during the end of life. Policies that have a daily benefit of $50 that were sold prior to March 1999 are grandfathered.

Protection can be achieved even if an elder consumed LTC benefits in the community and only has only a modest amount of benefit remaining upon entry to a nursing home. That was historically not the case. Prior to legislation several years ago, a qualifying LTC policy had to have two full years of unused benefits when an elder was placed in a nursing home in order to get protection from the Commonwealth. Now the policy just needs to be in place.

So an elder can use benefits in the community, and the policy will still protect against a lien on the home and recovery against his or her estate.

You must keep in mind that having the minimum policy may not protect the assets you currently have if you are over the Medicaid threshold. In other words, if you have $300,000 in assets and only a $125/day policy, you are still going to have to pay the nursing home up to $250/day until you spend down to the Medicaid allowable cap of $2,000 as an individual or $120,000 if you are married. A nursing home currently costs approximately $375/day.

You would have to spend your savings above $120,000 (in the above example, $180,000) because you have too many assets to qualify for Medicaid in the first place. Protecting against a lien and estate recovery is only an issue when an elder has successfully been on Medicaid.

That said, the protection of your home against lien and your estate from recovery by even a minimal LTC policy can be a great benefit provided by the state and should not be overlooked when planning for one’s future. I suggest working with an LTCI specialist due to the complexity of the product and the laws.

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