Wealthy Americans See Need in Long-Term Care Insurance
“You can’t take it with you when you go.” By today’s standards, this translates to something more like: it’s probably a good idea to make your money work for you in the here and now. That’s a lesson wealthy Americans seem to be coming to terms with, according to a survey commissioned by PNC Financial Services Group.
PNC asked Harris Interactive to conduct an online survey in October and November 2005 among a nationwide cross section of 1,485 adults age 18 or over with annual employment incomes of $150,000 or more, and at least $500,000 in assets. They also polled retirees with $1 million or more in assets. What the researchers found was that nearly half of the respondents, or 47 percent, reported that providing for their health and wellness is their chief financial concern. Despite their obviously solid financial footing, those surveyed proved that people everywhere are recognizing the fact that medical expenses and long-term care costs are a major threat to financial security for themselves and their families.
The survey also uncovered just how significant a threat these respondents viewed long-term care costs. More than one-third of those polled, or 35%, felt that long-term care costs and expensive medical treatment were a “threat or huge threat.” Oddly enough, although these wealthy Americans realize the vulnerable position future health care needs place them in, few have made any real attempt at planning for the eventuality. The survey showed that twenty-two percent of those with living parents worry about their parents’ lack of long-term care insurance. In fact, 70% of those responding said that they had not purchased long-term care for themselves or their spouse because they didn’t want to pay premiums for a policy they may never use.
A significant factor that may be contributing to this mind set is the result of a practice used by wealthy parents for some time now that helped their children care for them if they required long-term care. In the past, parents transferred all their assets to their children. This strategy not only protected the assets, but also made the parents eligible for Medicaid. Parents can still do this, but it’s not as simple a transfer as it once was.
Currently, if an individual wants to transfer assets to become eligible for federal assistance, they must do so within three years of becoming eligible. However, a new law that took effect on February 8, 2006 makes it more difficult to qualify by just giving your money away. Individuals will now have to transfer assets within five years of entering a nursing home to qualify for Medicaid. Each state has the option of implementing the new rules according to its own timetable.
The implications of this new law include having to prove that money was given away innocently, meaning that it wasn’t transferred for the sole purpose of making the individual eligible for Medicaid. Although there are Medicaid hardship waivers, claimants will have a hard row to hoe to prove they qualify.
The new law will change the start of the penalty period for an individual who has transferred assets from the date the transfer was made to the date they applied for Medicaid. The law may also penalize family transactions that have occurred over time, especially if the individual hasn’t kept accurate records, by increasing the look back period from three to five years. The outcome of all of this additional tightening, according to the Congressional Budget Office, is that 120,000 people, or approximately 15% of new Medicaid applicants, will be delayed eligibility each year. In light of this new development, it seems that the most prudent course of action is providing for your own needs with a sound long-term care insurance policy. Call us today 800–240–3390 to learn about a policy that is right for you.