At what age should you engage in long-term care planning? At 60? 70? 80?
The answer really depends on what long-term care planning means for you. If it means buying long-term care insurance (LTCI), 50 or 60 is probably a good age. If you are contemplating transferring assets in order to qualify for MassHealth without spending them down, we would advise waiting until age 70 or later. These recommendations are based on the following considerations:
- The cost of LTCI rises steeply after age 60. According to one calculator, the same policy providing $200 a day of coverage for three years with a 4% inflation rider would cost $1,716 a year at age 50, $2,628 at 60 and $4,128 at 70.
- The older you get, the more likely you will have a medical condition that would make LTCI unavailable or force you to pay a higher premium.
- It probably doesn't make sense to buy an LTCI policy before age 50 since that would almost certainly mean paying for decades. Most people don't need care until after age 85. Even at 50, 85 is 35 years away. Who knows what health care and long-term care will look like that far into the future? For instance, today many older LTCI policies do not cover assisted living which has become one of the major players in the field of long-term care.
- If you are considering planning to preserve some of your assets in case you need to rely on MassHealth for coverage of your care, the main planning technique is to transfer your assets. You can do this outright as gifts, into an irrevocable trust, or in some cases through forms of joint ownership. In most instances, any transfer will cause you to be ineligible for benefits for the next five years.
- If you give away assets, you have given them away. While trusts and some forms of joint ownership provide asset protection, they don't necessarily give you access. And if you give assets to children planning that they will make them available to you if necessary in the future, don't count on it. We have seen too many instances of children spending transferred money, moving parents out of homes transferred to them, facing financial challenges, spending funds, getting divorced, or passing away before their parents.
- As we have reported, MassHealth also changes its laws and regulations or its interpretation of the same laws and regulations. As we have reported, trusts that were accepted five or 10 years ago when created are now being challenged by MassHealth.
- Due to all of these factors, it makes sense to delay MassHealth planning until at least age 70, and perhaps to age 80.
While the purchase of LTCI should probably occur before age 60 and MassHealth planning in most instances should wait until age 70 or later, both family history and your own health should be significant guides. In addition, it's never too late to make sure that you have an up-to-date durable power of attorney, health care proxy and HIPPA release. These three documents can be your most effective and least expensive long-term care planning measures.