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Long-term care planning is vital

Long-term care in Colorado is not a luxury because it will be needed by an estimated 70 percent of people over 65-years-old. Families must prepare for paying for nursing home or in-home care as part of their long-term planning.

Inability to undertake daily activities because of physical or cognitive reasons usually require long-term care. These activities include evaluation, continence, toileting, bathing, eating and dressing. Inability to do two of these tasks usually triggers the need for assistance and long-term care policies.

Medicare was established over 50 years to help recipients get better from ailments, such as a stroke or fractured hip. There was no anticipation of illnesses, such as Alzheimer's and other long-term diagnosis where care may be needed for the rest of a recipient's life.

Accordingly, Medicare does not pay for long-term care. It may sometimes cover 20 days of coverage for short-term recovery after a 3-day hospital stay. An additional 80 days may be paid for with a co-pay and there is no coverage after 100 days.

Medicaid may finance long-term care. But Medicaid planning must recognize that a person must use up most of their assets to qualify for this program. Coverage is also limited to a specially-license nursing home facility and for semi-private rooms with another resident. Medicare does not pay for care at home which is often preferable.

Protecting assets requires planning. The Pension Protection Act allows, in some cases, withdrawal of cash value from life insurance policies or for purchasing an annuity to finance care. Sometimes an annuity may be exchanged for a long-term care policy or a death benefit may be accelerated for this care without tax consequences.

Long-term care insurance has lost some of its advantages. It has become less available, increasingly expensive, and may be lost if not used. Newer types of policies can address some of these issues, however. Planning should also deal with a five-year look back period that may disqualify applicants from Medicare coverage when some assets are transferred.

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