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Do you need long-term care insurance?

The answer is that everyone should do long-term health care planning, but long-term care insurance is debatable. According to Colorado State University, 70 percent of people 65 or older will need some type of long-term care. It may be home care, adult daycare, assisted living care or nursing home care.

Long-term care is costly. For instance, back in 2013, Colorado's annual cost for assisted living was over $42,000, with nursing home care averaging around $77,000. Those costs have probably increased substantially over the last four years.

There are different options you can consider when planning for long-term care. The important thing is that you make a plan. Let's look at some options:

Out-of-pocket/savings: You will need to plan to have enough in savings or income to sustain you for 10 or 20 years. No one can predict tomorrow, so you never know when you might need long-term care or how long you will need it. Life savings can be depleted quickly depending on your needs. Also, if you have a spouse, you probably do not want to leave him or her struggling financially when your savings are all gone.

Life insurance police or annuity: You may plan to use a life insurance policy or an annuity that accrues interest and builds a cash reserve. You will have to bank on the cash reserve netting the amount of return you are predicting, of course.

Long-term care insurance: If you purchase long-term care insurance, read your policy carefully to see what all will be covered. Also, most companies selling these policies guarantee their renewability, but they do not guarantee the rates will stay the same. Beware of drastically increased rates over the years, which could cause you to lose it all if you are unable to pay the increased premiums.

Medicaid: Medicaid pays for long-term care; however, to be eligible for Medicaid, your income and assets must be less than a certain amount. Medicaid exempts your home and one vehicle from being counted in the eligibility requirements (as long as they are under a certain value). There are ways to keep other assets and/or income from being counted when it comes to Medicaid eligibility, such as putting your estate in a trust.

An estate planning attorney can go over your choices for long-term care. They can also help you with Medicaid planning if that option is right for you.

Source: Colorado State University Extension, "Long-Term Care Planning - 9.152," N. Porter and L. Kubin, accessed Jan. 11, 2018

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