It may be the ethical way of estate planning, but it also may not be the best choice. I helped my Mom get LTC insurance some years ago, and now it pays about half of her nursing home bill. Luckily she has good monthly income from pensions and social security, so her bank account balances only go down a little each month.
Mom had to be confined in the dementia unit a couple of years ago, because she kept walking away from the non-confinement assisted living unit she had been in. The dementia unit costs over $9K per month.
Most of the other patients in the dementia unit are there on Medicaid. They get EXACTLY the same treatment as my Mom does as a privately paid patient. EXCEPT for the fact that we have to pay for Mom"s adult diapers, medications and anything else she might need. The Medicaid patients all get those items paid for.
My parents lived frugally, worked hard and made good financial decisions, so that after my Dad died, Mom had a fair amount of money.
Some years ago, I helped Mom invest in LTC insurance. Over the years, we paid in $40k to $50k in premiums. Had Mom passed without ever going into a nursing home, the estate would have not recovered anything from the LTC policy.
As it is, Mom IS receiving some benefits. I would guess that we have exceeded the investment we made for the LTC insurance. The policy will pay for 5 years or a dollar payout figure, which I think was $500k, whichever comes first. After that we will be responsible for paying for her care.
Mom still has about $300k in the bank. We have no idea of how long she will continue to live and need to be in the nursing home.
If I had known then what I know now, I think we would have done things differently. I have 3 siblings, and we would have distributed the bulk of Mom"s money in the family, early enough so her net worth would have qualified her for Medicaid. As it is, I believe that her money WILL be used up paying for care that other families get essentially for free.
It galls me that the way things are, my Mom gets exactly the same (pretty good) treatment as the Medicaid patients get, except that I end up writing checks for about $9500 a month while their families pay nothing. That hardly seems fair.
It sure makes me wonder if "doing the right thing" is a stupid financial decision. An interesting comment on the time we live in.
Oh well, live and learn. I can"t change the decisions made years ago. Good luck!
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Today's Featured Article - Oil Bath Air Filters - by Chris Pratt. Some of us grew up thinking that an air filter was a paper thing that allowed air to pass while trapping dirt particles of a particles of a certain size. What a surprise to open up your first old tractor's air filter case and find a can that appears to be filled with the scrap metal swept from around a machine shop metal lathe. To top that off, you have a cup with oil in it ("why would you want to lubricate your carburetor?"). On closer examination (and some reading in a AC D-14 service manual), I found out that this is a pretty ingenious method of cleaning the air in the tractor's intake tract.
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