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Practical Planning Tip: Women and Wealth - Long-Term Care Planning For Women

March 28, 2024

Today we’re going to continue our discussion on women & wealth.

The topic I want to discuss today is Long-term Care Planning for Women:

Rising long-term care costs is an issue facing all Americans. Since, on average, women live longer than men and are the primary caregivers for their spouse, causes them to face an increased burden. It’s critical for women to plan for the likelihood that nursing home or long-term home care will be needed. To ensure that they’ll have sufficient resources to pay for their long-term-care needs, women should explore the following options:

The First is Self funding: Paying out of pocket for long-term-care costs is a realistic option for high-net-worth families and an inevitability for folks who don’t appropriately plan. However, monthly nursing home costs can be prohibitively expensive, ranging between $7,500 and $20,000 a month depending on one’s location. This cost can cause many Americans to wipe out an entire lifetime of savings in the event of a significant long-term-care need. So, private pay, or paying out of pocket, may not be optimal for many.

Another option is Long-Term-Care insurance: Traditional long-term-care insurance or a hybrid policy is an excellent option for many individuals. It’s especially useful for female clients, whose cost of care is likely to be more expensive due to living longer and lack of care provided by a spouse (who may already be deceased). If insurance is purchased while an individual is relatively young and healthy, it can significantly help defray the costs of care when needed. The downside is that many policies purchased today are very expensive relative to how they were priced in the past. Moreover, because of medical underwriting requirements, many people may not be eligible due to a past or current health situation. Clients may also have a policy whose daily benefit is far eclipsed by the actual cost of care.

One of the more recent, and popular long-term-care insurance products on the market today is a life insurance policy with a long-term-care rider. The way it works is you go through traditional life insurance underwriting. IF the policy holder needs long-term care coverage, they have it. If they are healthy and die without needing any long-term care, then their beneficiaries will get the death benefit. What many people like about these policies is if you don’t use it, your beneficiaries will still get something. Additionally, the likelihood of premiums being raised, like they are with traditional long-term-care insurance is less likely. In full disclosure, I personally have a policy like this myself.

Next consideration is Medicaid planning: For those who aren’t candidates for the previously mentioned options, Medicaid can be a savior. To qualify, the individual must meet asset and income requirements, which vary by state. For example, in New York, perhaps the most generous of states, an individual applying for Medicaid can have no more than $30,182 in non-exempt assets. In other states, that asset threshold may be as low as $2,000. Furthermore, most states impose a 5-year lookback on transfers. Therefore, it’s critical for Medicaid planning to start early.

For women to plan appropriately, it’s important to start the process by their 60s. The earlier they start, the more options they’ll have available to them.


You can WATCH the full video here.