What If Your Client Already Needs Long-Term Care?

But some insurers might offer a policy with provisions aimed at applicants with health problems.

For some clients, she said, a second option might be using an income annuity.

If Jane Doe is already about to begin using long-term care, she could pay for known long-term care expenses by putting cash in a single-premium immediate annuity.

If she was not using long-term care care but expected to need care at some point in the future, she could buy a single-premium deferred annuity.

The tax treatment for annuities designed to pay for long-term care might be more favorable than the tax treatment of ordinary annuities, Beil noted.

Long-term care annuities can be issued up to age 80. The annuities don’t require a medical exam, and the applications usually have fewer questions than stand-alone long-term care insurance applications, Beil said.

A third strategy to discuss is use of savings or investments to self-insure.

Finally, most clients with assets will want to avoid depending solely on Medicaid to pay for care, partly because of an aversion to depending on a program designed to serve the poor and partly because of the reality that many high-quality assisted living facilities and nursing homes refuse to take Medicaid.

But some high-quality care providers in a community may make care available to patients who pay the full private-pay price for several years and then end up qualifying for Medicaid.

Jane Doe’s advisor should know which high-quality nursing homes and assisted living facilities in her area will make beds available to patients paying with Medicaid and what the eligibility rules are for patients converting to Medicaid.

Kim Beil. Credit: Janney