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Newsday, Melville, N.Y., Family & Relationships Column: Elder Care Plans: Door 1, 2 or 3?

Posted on: Saturday, 13 May 2006, 06:03 CDT

By Saul Friedman, Newsday, Melville, N.Y.

May 13--There was the time, when the generations were together and dishes were cleared from the Passover or Easter Sunday tables, that the talk should have turned to serious things - the what ifs that no one wants to talk about.

It goes by the name "elder care planning," but it really means what if your loved ones of the older generation can no longer live in their homes or care for themselves or each other. How might at least one of them stay in their home? Is assisted living an option? And what if one of the younger, boomer generation with a family history of illness needs planning for long-term care?

With the federal government gutting or changing the nature of Medicare, restricting the use of Medicaid for long-term care and, in partnership with business, squeezing the life out of working- and middle-class pensions, how is one to plan for civilized, affordable and dignified long-term care?

Certified Financial Planner George M. Orefici of Hauppauge, who is with Metlife and contributes to Newsday, writes wisely there are only three basic choices when considering elder / estate planning: "Do nothing and hope for the best, relinquish control of your assets or insure against the risks" of long-term illness or disability for yourself and/or your spouse.

The first option, involving procrastination and perhaps hoping government will bail you out, "is obviously not the best one," Orefici said, "but it is the road most people take." Yet it may be the best choice for people with meager incomes, assets or resources to let Medicaid pay for nursing care, with Medicare covering medical bills.

The second option, transferring control of a substantial nest egg to relatives to qualify for Medicaid, "may be tricky," Orefici said. Can you trust that the person(s) to whom you transfer these assets won't get in financial hot water or become ill? And people may run afoul of new congressional restrictions against assets transfers we've described in this column.

These laws have forced us to the third option. "Insuring the risk," Orefici said, "is the most comprehensive and simplest option, assuming you are insurable." Individuals in their 50s and 60s may balk at the cost of a policy they may never use. But think of the cost to you and your family if you do need nursing care - the national average cost for a nursing home is $74,000 a year; in New York it's more like $115,000.

But New Yorkers and residents of a few other states (Indiana, Connecticut and California) can take advantage of reasonably priced insurance deals, called Partnerships, that will provide a certain amount of long-term care at home or in a nursing home, while protecting their assets if they run out of insurance coverage and need Medicaid.

One of the oldest is the New York State Partnership for Long Term Care (see www.nyspltc.org), about which we have written and Orefici recommends. Backed and subsidized by the state, it was designed to save money for Medicaid, intended for the truly poor, by providing an alternative for people with savings who would otherwise impoverish themselves to become eligible for Medicaid. This practice can involve high legal expenses and spouses may be sued for their loved one's Medicaid bills.

In New York, there are four kinds of partnership policies. One, the Partnership's original offering, requires you purchase a policy for at least three years of nursing home care and six years of home care, or any combination of the two, at $189 per day for nursing home care and $95 for home care. This is the minimum required; you may buy more generous and longer lasting policies.

A second policy provides a minimum of four years of nursing home and/or home care at $189 per day. Like the first, it provides for a 100-day "elimination period," like a deductible, during which Medicare pays nursing home benefits.

But here's the best part: either plan provides "total asset protection," which means when the insurance runs out, you may apply for Medicaid and all assets - though not the income from those assets - are protected.

There are two newer policies, providing "dollar for dollar asset protection." The first requires that you buy a policy providing a minimum of 1.5 years of nursing home care and/or three years of home care. Or there is one that provides 2.5 years of nursing home care and/or 5 years of home care, at $189 and $95. The second of these provides from 2 to 2.5 years in a nursing home and/or home care at $189 a day.

When the insurance benefits run out under these policies, the patient's assets remain untouched if Medicaid is granted. But his/her estate shall repay Medicaid from those assets the dollars spent on his/her care. The insurance, incidentally, will not affect the rights of the spouse who remains at home to the allowances provided by the law.

All four policies must provide nursing home care and, under home health care, assisted-living care, skilled nursing care, adult day care, 14 days of respite care per year and hospice care. And all policies provide 5 percent inflation protection.

The older you are, the higher the cost. But the Partnership Web site says the annual premium for a 65-year-old without a serious health problem is $2,587 annually for a basic, three-year policy.

The Partnership policies are offered through a number of large and respected companies, and since a policy may not be used for years, experts suggest you look through research for a financially solid company likely to be around when you need it.

WRITE TO Saul Friedman, Newsday, 235 Pinelawn Rd., Melville, NY, 11747-4250,

or by e-mail at saulfriedman@comcast.net.

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Copyright (c) 2006, Newsday, Melville, N.Y.

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Source: Newsday, Melville, N.Y.

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