John R. Bullis: There are various ways to pay for long-term care

The cost of living in nursing home as of May 2013 is about $7,139 per month in Nevada. The cost of nursing services in the home by qualified caregivers can be that much or even more for 24-hour care. Hopefully we won’t need that care, or not for very long. However, it seems the average need is about three years of care.

If a veteran has low income and less than $80,000 in assets, he or she may be eligible for up to $2,000 per month for home health care, a nursing home or assisted living. A look at will give some information about the program.

If you have a “whole-life” life-insurance policy, the cash value might be a help in paying for the care. If the withdrawals are more than the total premiums paid, the excess is probably taxable as ordinary income, but the premiums-paid amount is likely to be tax-free. Some folks have sold their “whole-life” life-insurance policies. The amount they receive depends on several factors — their age, their health, the size of the policy and whom they sell it to. Life-settlement buyers always pay less than the face amount of the policy — the death benefit.

If someone is “terminal” (expected to die in one year), perhaps the policy will allow payments now of part of the death benefit. Those payments are usually treated as life-insurance benefits, tax-free. Your savings can be used up fairly quickly if you pay “out of pocket” for the care. That’s partly why you saved it, but the high monthly cost of long-term care will reduce the savings that you might leave to your heirs. Some folks buy a life-insurance policy with a long-term-care insurance rider. It builds a cash value, pays for long-term care (if needed) and has a death benefit as well. Others buy a long-term-care insurance policy covering home care and/or nursing home. If a couple buys those policies, the unused portion for one spouse may transfer to the surviving spouse.

The welfare known as Medicaid is available to a single individual with income of $2,130 per month and only $2,000 in the bank. He or she can have as “exempt” assets a primary home with less than $550,000 equity, a car and a couple of other small items. The problem with Medicaid is the rules to qualify and the sharing of a room with other patients that may prevent you from sleeping, etc. See an elder-law attorney before you think of maybe going the Medicaid route.

Did you hear? “Chance comes to those who know what they want.” — African proverb

John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.


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