Understanding the Common Types of Trusts

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A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a “trustee,” holds legal title to property for another person, called a “beneficiary.”

Trusts fall into two basic categories: testamentary and inter vivos.

A testamentary trust is one created by your will, and it does not come into existence until you die. In contrast, an inter vivos trust, starts during your lifetime. You create it now and it exists during your life.

There are two kinds of inter vivos trusts: revocable and irrevocable.

Revocable Trusts

Revocable trusts are often referred to as “living” trusts. With a revocable trust, the person who created the trust, called the “grantor” or “donor,” maintains complete control over the trust and may amend, revoke or terminate the trust at any time. This means that you, the donor, can take back the funds you put in the trust or change the trust's terms. Thus, the donor is able to reap the benefits of the trust arrangement while maintaining the ability to change the trust at any time prior to death.

Revocable trusts are generally used for the following purposes:

  1. Asset management. They permit the named trustee to administer and invest the trust property for the benefit of one or more beneficiaries.
  2. Probate avoidance. At the death of the trust grantor, the trust property passes to whoever is named in the trust. It does not come under the jurisdiction of the probate court and its distribution need not be held up by the probate process. However, the property of a revocable trust will be included in the grantor's estate for tax purposes.
  3. Tax planning. While the assets of a revocable trust will be included in the grantor's taxable estate, the trust can be drafted so that the assets will not be included in the estates of the beneficiaries, thus avoiding taxes when the beneficiaries die.

Irrevocable Trusts

An irrevocable trust cannot be changed or amended by the grantor. Any property placed into the trust may only be distributed by the trustee as provided for in the trust document itself. For instance, the grantor may set up a trust under which he or she will receive income earned on the trust property, but that bars access to the trust principal. This type of irrevocable trust is a popular tool for Medicaid planning.

Testamentary Trusts

As noted above, a testamentary trust is a trust created by a will. Such a trust has no power or effect until the will of the grantor is probated. Although a testamentary trust will not avoid the need for probate and will become a public document as it is a part of the will, it can be useful in accomplishing other estate planning goals. For instance, the testamentary trust can be used to reduce estate taxes on the death of a spouse or to provide for the care of a disabled child.

Supplemental Needs Trusts

The purpose of a supplemental needs trust is to enable the donor to provide for the continuing care of a disabled spouse, child, relative or friend. The beneficiary of a well-drafted supplemental needs trust will have access to the trust assets for purposes other than those provided by public benefits programs. In this way, the beneficiary will not lose eligibility for benefits such as Supplemental Security Income, Medicaid and low-income housing. A supplemental needs trust can be created by the grantor during life or be part of a will.

Credit Shelter Trusts

Credit shelter trusts are a way to take full advantage of state and federal estate tax exemptions.

 

Medicare Beneficiaries May Be Eligible for an Extra 100 days of Skilled Nursing Coverage Due to Pandemic

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The COVID-19 pandemic has been particularly devastating for nursing homes and their residents.  Aside from the tragically disproportionate loss of life, care for surviving residents has been delayed or interrupted due to infection, facility lockdowns or other health system disruptions.  In such cases, Medicare beneficiaries who qualified for skilled nursing facility (SNF) coverage may be eligible for an additional 100 days of coverage. Whether all qualified beneficiaries will actually get the extended coverage is another question.

Medicare does not pay for long-term care, just for “medical” care from a doctor or other health care professional or in a hospital. But there's a partial exception to this rule. Medicare will pay for up to 100 days of care per “spell of illness” in an SNF as long as the following two requirements are met:

1. Your move to an SNF followed a hospitalization of at least three days; and

2. You need and will be receiving skilled care.

After the 100 days of coverage ends, a new spell of illness can begin if the patient has not received skilled care, either in an SNF or a hospital, for a period of 60 consecutive days. The patient can remain in the SNF and still qualify as long as he or she does not receive a skilled level of care, but only custodial care, during that 60 days.

Following the declaration of a public health emergency this spring, the federal Centers for Medicare and Medicaid Services (CMS) issued a letter granting a waiver to allow Medicare beneficiaries coverage for an additional 100 days in an SNF, without satisfying the new spell of illness requirement, in certain COVID-19 related circumstances. The letter stated that the policy will apply only to skilled-care beneficiaries whose process of care was interrupted by the public health emergency. (The letter also waived the three-days-in-a-hospital rule in certain cases.)

Six months after that letter, however, there is still confusion about which COVID-19 related circumstances qualify for the waiver. Importantly, according to the Center for Medicare Advocacy, CMS recently confirmed that beneficiaries do not necessarily have to have a COVID-19 diagnosis to qualify for the additional 100 days of coverage. Rather, as described by Skilled Nursing News, “[t]he question is whether the emergency situation interrupted the patient’s path to 60 consecutive days of non-skilled, custodial care.”

In an August 26, 2020, memorandum, CMS attempted to clarify how it would determine whether a disruption in care was related to the public health emergency: “This determination basically involves comparing the course of treatment that the beneficiary has actually received to what would have been furnished absent the emergency. Unless the two are exactly the same, the provider would determine that the treatment has been affected by – and, therefore, is related to – the emergency.” 

However, in some cases, nursing homes do not understand how the waiver applies or are not inclined to help patients with a waiver application. The Center for Medicare Advocacy offers a detailed case example of an individual who appears to meet the criteria for additional Medicare coverage but who has encountered multiple barriers in getting it.   

In addition to confusion over who qualifies for the extended coverage, the Center for Medicare Advocacy has found that the “waiver that extends SNF benefits by up to 100 days does not appear to afford beneficiaries the same rights as the first 100 days of statutory coverage,” including rights to appeal coverage denials. The Center reports that it “has received an increasing number of requests for guidance on expanded Medicare coverage in skilled nursing facilities.” In response, the organization has compiled self-help materials to assist beneficiaries and their advocates. 

The Center is asking those with experiences pursuing coverage under the public health emergency rules, waivers, or guidance to contact it at Communications@MedicareAdvocacy.org

 

 

 

 

 

Nursing Home Residents Face Even Greater Barriers to Voting Amid Coronavirus Pandemic

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The coronavirus pandemic has forced nursing homes to place a number of restrictions on their residents. These constraints are having the unintended consequence of making it more difficult for nursing home residents to vote. Hundreds of thousands of nursing home and assisted living community residents could be disenfranchised.

Older Americans are some of the most reliable voters, but nursing home residents face challenges to voting even in normal times, and they are encountering even greater barriers this election season. In response to the coronavirus pandemic, nursing homes have locked down, prohibiting family and friends from visiting residents and residents from leaving the facilities. This means residents may not be able to leave to vote and also will not be able to have help from family members or organizations in obtaining and filling out mail-in ballots. 

In past years, nursing homes and assisted living facilities often acted as polling places, but many of those are being moved due to the pandemic. In addition, nonpartisan organizations have historically been able to enter nursing homes to assist residents with their ballots, but it is unclear whether this will be allowed this year. North Carolina and Louisiana specifically prohibit nursing home staff from assisting residents with their ballots, but even in states that don’t explicitly prohibit it, overworked staff may not have the time to help residents. 

While federal law requires nursing homes to protect their residents’ rights, including the right to vote, it is “a really open question to what extent people in long-term care institutions are going to be able to participate in our election in November,” says Nina Kohn, a law professor at Syracuse University who has studied facility residents’ voting-rights issues. Kohn warns that “we should be clear that there is tremendous reason to be concerned that nursing home residents will be . . . systematically disenfranchised in this election,” 

For more information about this issue, click here, here, and here. 

 

Medicare Open Enrollment Starts October 15: Is It Time to Change Plans?

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Medicare's Open Enrollment Period, during which you can freely enroll in or switch plans, runs from October 15 to December 7. Now is the time to start shopping around to see whether your current choices are still the best ones for you.  

During this period you may enroll in a Medicare Part D (prescription drug) plan or, if you currently have a plan, you may change plans. In addition, during the seven-week period you can return to traditional Medicare (Parts A and B) from a Medicare Advantage (Part C, managed care) plan, enroll in a Medicare Advantage plan, or change Advantage plans. 

Beneficiaries can go to www.medicare.gov or call 1-800-MEDICARE (1-800-633-4227) to make changes in their Medicare prescription drug and health plan coverage.

According to the New York Times, few Medicare beneficiaries take advantage of Open Enrollment, but of those who do, nearly half cut their premiums by at least 5 percent. Even beneficiaries who have been satisfied with their plans in 2020 should review their choices for 2021, as both premiums and plan coverage can fluctuate from year to year. Are the doctors you use still part of your Medicare Advantage plan’s provider network? Have any of the prescriptions you take been dropped from your prescription plan’s list of covered drugs (the “formulary”)? Could you save money with the same coverage by switching to a different plan?

For answers to questions like these, carefully look over the plan's “Annual Notice of Change” letter to you. Prescription drug plans can change their premiums, deductibles, the list of drugs they cover, and their plan rules for covered drugs, exceptions, and appeals. Medicare Advantage plans can change their benefit packages, as well as their provider networks.  

Remember that fraud perpetrators will inevitably use the Open Enrollment Period to try to gain access to individuals' personal financial information. Medicare beneficiaries should never give their personal information out to anyone making unsolicited phone calls selling Medicare-related products or services or showing up on their doorstep uninvited. If you think you've been a victim of fraud or identity theft, contact Medicare. 

Here are more resources for navigating the Open Enrollment Period:

The Ins and Outs of Guardianship and Conservatorship

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Every adult is assumed to be capable of making his or her own decisions unless a court determines otherwise. If an adult becomes incapable of making responsible decisions, the court will appoint a substitute decision maker, usually called a “guardian,” but called a “conservator” or another term in some states.

Guardianship is a legal relationship between a competent adult (the “guardian”) and a person who because of incapacity is no longer able to take care of his or her own affairs (the “ward”). The guardian can be authorized to make legal, financial, and health care decisions for the ward. Depending on the terms of the guardianship and state practices, the guardian may or may not have to seek court approval for various decisions. In many states, a person appointed only to handle finances is called a “conservator.”

Some incapacitated individuals can make responsible decisions in some areas of their lives but not others. In such cases, the court may give the guardian decision making power over only those areas in which the incapacitated person is unable to make responsible decisions (a so-called “limited guardianship”). In other words, the guardian may exercise only those rights that have been removed from the ward and delegated to the guardian.

Incapacity

The standard under which a person is deemed to require a guardian differs from state to state. In some states the standards are different, depending on whether a complete guardianship or a conservatorship over finances only is being sought. Generally, a person is judged to be in need of guardianship when he or she shows a lack of capacity to make responsible decisions. A person cannot be declared incompetent simply because he or she makes irresponsible or foolish decisions, but only if the person is shown to lack the capacity to make sound decisions. For example, a person may not be declared incompetent simply because he spends money in ways that seem odd to someone else. Also, a developmental disability or mental illness is not, by itself, enough to declare a person incompetent.

Process

In most states, anyone interested in the proposed ward's well-being can request a guardianship. An attorney is usually retained to file a petition for a hearing in the probate court in the proposed ward's county of residence. Protections for the proposed ward vary greatly from state to state, with some simply requiring that notice of the proceeding be provided and others requiring the proposed ward's presence at the hearing. The proposed ward is usually entitled to legal representation at the hearing, and the court will appoint an attorney if the allegedly incapacitated person cannot afford a lawyer.

At the hearing, the court attempts to determine if the proposed ward is incapacitated and, if so, to what extent the individual requires assistance. If the court determines that the proposed ward is indeed incapacitated, the court then decides if the person seeking the role of guardian will be a responsible guardian.

A guardian can be any competent adult — the ward's spouse, another family member, a friend, a neighbor, or a professional guardian (an unrelated person who has received special training). A competent individual may nominate a proposed guardian through a durable power of attorney in case she ever needs a guardian.

The guardian need not be a person at all — it can be a non-profit agency or a public or private corporation. If a person is found to be incapacitated and a suitable guardian cannot be found, courts in many states can appoint a public guardian, a publicly financed agency that serves this purpose. In naming someone to serve as a guardian, courts give first consideration to those who play a significant role in the ward's life — people who are both aware of and sensitive to the ward's needs and preferences. If two individuals wish to share guardianship duties, courts can name co-guardians.

Reporting Requirements

Courts often give guardians broad authority to manage the ward's affairs. In addition to lacking the power to decide how money is spent or managed, where to live and what medical care he or she should receive, wards also may not have the right to vote, marry or divorce, or carry a driver's license. Guardians are expected to act in the best interests of the ward, but given the guardian's often broad authority, there is the potential for abuse. For this reason, courts hold guardians accountable for their actions to ensure that they don't take advantage of or neglect the ward.

The guardian of the property inventories the ward's property, invests the ward's funds so that they can be used for the ward's support, and files regular, detailed reports with the court. A guardian of the property also must obtain court approval for certain financial transactions. Guardians must file an annual account of how they have handled the ward's finances. In some states guardians must also give an annual report on the ward's status. Guardians must offer proof that they made adequate residential arrangements for the ward, that they provided sufficient health care and treatment services, and that they made available educational and training programs, as needed. Guardians who cannot prove that they have adequately cared for the ward may be removed and replaced by another guardian.

Alternatives to Guardianship

Because guardianship involves a profound loss of freedom and dignity, state laws require that guardianship be imposed only when less restrictive alternatives have been tried and proven to be ineffective. Less restrictive alternatives that should be considered before pursuing guardianship include:

  • Power of Attorney. A power of attorney is the grant of legal rights and powers by a person (the principal) to another (the agent or attorney-in-fact). The attorney-in-fact, in effect, stands in the shoes of the principal and acts for him or her on financial, business or other matters. In most cases, even when the power of attorney is immediately effective, the principal does not intend for it to be used unless and until he or she becomes incapacitated. 
  • Representative or Protective Payee. This is a person appointed to manage Social Security, Veterans' Administration, Railroad Retirement, welfare or other state or federal benefits or entitlement program payments on behalf of an individual.
  • Conservatorship. In some states this proceeding can be voluntary, where the person needing assistance with finances petitions the probate court to appoint a specific person (the conservator) to manage his or her financial affairs. The court must determine that the conservatee is unable to manage his or her own financial affairs, but nevertheless has the capacity to make the decision to have a conservator appointed to handle his or her affairs.
  • Revocable trust. A revocable or “living” trust can be set up to hold an older person's assets, with a relative, friend or financial institution serving as trustee. Alternatively, the older person can be a co-trustee of the trust with another individual who will take over the duties of trustee should the older person become incapacitated.

Contact your attorney to discuss ways to protect against a guardianship. 

When Should You Update Your Estate Plan?

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Once you've created an estate plan, it is important to keep it up to date. You will need to revisit your plan after certain key life events, including marriage, the birth of children, divorce or the death of a spouse, and a significant increase or decrease in assets.  Here's why.

Marriage

Whether it is your first or a later marriage, you will need to update your estate plan after you get married. A spouse does not automatically become your heir once you get married. Depending on state law, your spouse may get one-third to one-half of your estate, and the rest will go to other relatives. You need a will to spell out how much you wish your spouse to get.

Your estate plan will get more complicated if your marriage is not your first. You and your new spouse need to figure out where each of you wants your assets to go when you die. If you have children from a previous marriage, this can be a difficult discussion. There is no guarantee that if you leave your assets to your new spouse, he or she will provide for your children after you are gone. There are a number of options to ensure your children are provided for, including creating a trust for your children, making your children beneficiaries of life insurance policies, or giving your children joint ownership of property.

Even if you don't have children, there may be family heirlooms or mementos that you want to keep in your family. 

Children

Once you have children, it is important to name a guardian for your children in your will. If you don't name someone to act as guardian, the court will choose the guardian. Because the court doesn't know your kids like you do, the person they choose may not be ideal. In addition to naming a guardian, you may also want to set up a trust for your children so that your assets are set aside for your children when they get older.

Similarly, when your children reach adulthood, you will want to update your plan to reflect the changes. They will no longer need a guardian, and they may not need a trust. You may even want your children to act as executors or hold a power of attorney.

Divorce or Death of a Spouse

If you get divorced or your spouse dies, you will need to revisit your entire estate plan. It is likely that your spouse is named in some capacity in your estate plan — for example, as beneficiary, executor, or power of attorney. If you have a trust, you will need to make sure your spouse is no longer a trustee or beneficiary of the trust. You will also need to change the beneficiary on your retirement plans and insurance policies.

Increase or Decrease in Assets

One part of estate planning is estate tax planning. When your estate is small, you don't usually have to worry about estate taxes because only estates over a certain amount, depending on current state and federal law, are subject to estate taxes. As your estate grows, you may want to create a plan that minimizes your estate taxes. If you have a plan that focuses on tax planning, but you experience a decrease in assets, you may want to change your plan to focus on other things.

Other

Other reasons to have your estate plan updated could include:

  • You move to another state
  • Federal or state estate tax laws have changed
  • A guardian, executor, or trustee is no longer able to serve
  • You wish to change your beneficiaries
  • It has been more than 5 years since the plan has been reviewed by an attorney

Contact your elder law attorney to update your plan.

Transferring Assets to Qualify for Medicaid

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Transferring assets to qualify for Medicaid can make you ineligible for benefits for a period of time. Before making any transfers, you need to be aware of the consequences. 

Congress has established a period of ineligibility for Medicaid for those who transfer assets. The so-called “look-back” period for all transfers is 60 months, which means state Medicaid officials look at transfers made within the 60 months prior to the Medicaid application. 

While the look-back period determines what transfers will be penalized, the length of the penalty depends on the amount transferred. The penalty period is determined by dividing the amount transferred by the average monthly cost of nursing home care in the state. For instance, if the nursing home resident transferred $100,000 in a state where the average monthly cost of care was $5,000, the penalty period would be 20 months ($100,000/$5,000 = 20). The 20-month period will not begin until (1) the transferor has moved to a nursing home, (2) he has spent down to the asset limit for Medicaid eligibility, (3) has applied for Medicaid coverage, and (4) has been approved for coverage but for the transfer. Therefore, if an individual transfers $100,000 on April 1, 2017, moves to a nursing home on April 1, 2018 and spends down to Medicaid eligibility on April 1, 2019, that is when the 20-month penalty period will begin, and it will not end until December 1, 2020.

Transfers should be made carefully, with an understanding of all the consequences. People who make transfers must be careful not to apply for Medicaid before the five-year look-back period elapses without first consulting with an elder law attorney. This is because the penalty could ultimately extend even longer than five years, depending on the size of the transfer.

Be very, very careful before making transfers. Any transfer strategy must take into account the nursing home resident's income and all of his or her expenses, including the cost of the nursing home. Bear in mind that if you give money to your children, it belongs to them and you should not rely on them to hold the money for your benefit. However well-intentioned they may be, your children could lose the funds due to bankruptcy, divorce, or lawsuit. Any of these occurrences would jeopardize the savings you spent a lifetime accumulating. Do not give away your savings unless you are ready for these risks.

In addition, be aware that the fact that your children are holding your funds in their names could jeopardize your grandchildren's eligibility for financial aid in college. Transfers can also have bad tax consequences for your children. This is especially true of assets that have appreciated in value, such as real estate and stocks. If you give these to your children, they will not get the tax advantages they would get if they were to receive them through your estate. The result is that when they sell the property they will have to pay a much higher tax on capital gains than they would have if they had inherited it.

As a rule, never transfer assets for Medicaid planning unless you keep enough funds in your name to (1) pay for any care needs you may have during the resulting period of ineligibility for Medicaid and (2) feel comfortable and have sufficient resources to maintain your present lifestyle.

Remember: You do not have to save your estate for your children. The bumper sticker that reads “I'm spending my children's inheritance” is a perfectly appropriate approach to estate and Medicaid planning.

Even though a nursing home resident may receive Medicaid while owning a home, if the resident is married he or she should transfer the home to the community spouse (assuming the nursing home resident is both willing and competent). This gives the community spouse control over the asset and allows the spouse to sell it after the nursing home spouse becomes eligible for Medicaid. In addition, the community spouse should change his or her will to bypass the nursing home spouse. Otherwise, at the community spouse's death, the home and other assets of the community spouse will go to the nursing home spouse and have to be spent down.

Permitted transfers

While most transfers are penalized with a period of Medicaid ineligibility of up to five years, certain transfers are exempt from this penalty. Even after entering a nursing home, you may transfer any asset to the following individuals without having to wait out a period of Medicaid ineligibility:

  • Your spouse (but this may not help you become eligible since the same limit on both spouse's assets will apply)
  • A trust for the sole benefit of your child who is blind or permanently disabled.
  • Into trust for the sole benefit of anyone under age 65 and permanently disabled.

In addition, you may transfer your home to the following individuals (as well as to those listed above):

  • A child who is under age 21
  • A child who is blind or disabled (the house does not have to be in a trust)
  • A sibling who has lived in the home during the year preceding the applicant's institutionalization and who already holds an equity interest in the home
  • A “caretaker child,” who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant's institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.

 

Nursing Homes Are Evicting Residents to Make Room for Coronavirus Patients

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Illegal evictions of Medicaid nursing home residents are nothing new, but the coronavirus pandemic is exacerbating the problem, according to an investigation by the New York Times.

Some states have asked nursing homes to accept coronavirus patients in order to ease the burden on hospitals. Even as the virus has devastated nursing homes, some have been welcoming these patients, who earn facilities far more than do Medicaid patients. To make room for these more lucrative coronavirus patients, the Times found that thousands of Medicaid recipients have been “dumped” by nursing homes. Many of the residents were sent to homeless shelters.

Nursing homes make far more money from short-term Medicare residents than from Medicaid residents, especially since the federal Centers for Medicare and Medicaid Services changed the reimbursement formula last fall. Now, writes the Times, a nursing home can get at least $600 more a day from a Covid-19 patient than from other, longer-term residents. In other cases, it wasn’t about the money but simply pressure from states to accept Covid patients. 

According to federal law, a nursing home can discharge a resident only if the resident's health has improved, the facility cannot meet the resident's needs, the health and safety of other residents is endangered, the resident has not paid after receiving notice, or the facility stops operating. In addition, a nursing home cannot discharge a resident without proper notice and planning. In general, the nursing home must provide written notice 30 days before discharge, though shorter notice is allowed in emergency situations. A discharge plan must ensure the resident has a safe place to go, preferably near family, and outline the care the resident will receive after discharge.

According to the New York Times, nursing homes have been discharging residents without proper notice or planning. Because long-term care ombudsmen have not been allowed into nursing homes, there has been less oversight of the process. Old and disabled residents have been sent to homeless shelters, rundown motels, and other unsafe facilities. The Times heard from 26 ombudsmen, from 18 states, who reported a total of more than 6,400 discharges during the pandemic, but this is likely an undercount. In New Mexico, all the residents of one nursing home were evicted to make room for coronavirus patients. 

If you or a loved one are facing eviction, you have the right to fight the discharge. Contact your attorney to find out the steps to take. 

To read the New York Times article about the evictions, click here. 

When Buying a Medigap Policy, It Really Pays to Shop Around

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Medigap policies that supplement Medicare’s basic coverage can cost vastly different amounts, depending on the company selling the policy, according to a new study. The findings highlight the importance of shopping around before purchasing a policy. 

When you first become eligible for Medicare, you may purchase a Medigap policy from a private insurer to supplement Medicare's coverage and plug some or virtually all of Medicare’s coverage gaps. You can currently choose one of eight Medigap plans that are identified by letters A, B, D, G, K, L, M, and N (If you were eligible for Medicare before January 1, 2020, but not enrolled, you may also be able to purchase Plans C and F, but those plans  are no longer available to people who are newly eligible for Medicare). Each plan package offers a different menu of benefits, allowing purchasers to choose the combination that is right for them. 

While federal law requires that insurers must offer the same benefits for each lettered plan–each plan G offered by one insurer must cover the same benefits as plan G offered by another insurer–insurers set their own prices for each plan. This means that the price of each plan varies considerably depending on the insurance company. 

The American Association for Medicare Supplement Insurance compared costs of plans in the top 10 metro areas and found huge cost differences. Using the most popular plan–Plan G–for comparison, the association found that in Dallas the lowest price for a 65-year-old woman to purchase a plan was $99 a month while the highest price was $381 a month. This is a yearly difference of more than $3,000 for the exact same plan. 

The association also found that no one company consistently offered the lowest or highest price. In their study, investigators discovered that 13 different companies had either the lowest or highest price. This means you can’t rely on just one company to always have the better price. 

When looking for a Medigap policy, make sure to get quotes from several insurance companies. In addition, if you are going through a broker, check with two or more brokers because one broker might not represent every insurer. It can be hard work to shop around, but the price savings can be worth it.

 

Four Ways the Coronavirus Pandemic May Affect Long-Term Care Insurance

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The coronavirus pandemic has had a devastating impact on the elderly, particularly those in nursing homes and other long-term care facilities. This has raised questions about how the virus has influenced the costs and provision of long-term care insurance, which covers care in facilities and sometimes at home as well. 

If you have a long-term care insurance policy, you may wonder how it is affected by the pandemic. If you don’t have a policy, you may wonder if the pandemic will make it more difficult to get one. An article by US News and World Report, examines issues with long-term care insurance that have arisen in the last few months, including the following:

  • Qualifying for insurance. It is already more difficult to qualify for long-term care insurance the older you get. Because older individuals are at a higher risk for coronavirus, this can affect your long-term care application as well. Some insurers have been limiting applicants’ ages or putting additional restrictions on applicants who have been in contact with the virus. If you had a positive COVID-19 test, you may have to wait for three to six months before qualifying for insurance. These policies vary by company. 
  • Premiums. Insurers can’t raise rates for customers due to individual circumstances. To raise rates, insurers must obtain approval from the state and raise them for the entire group. However, if you are considered high risk due to exposure to coronavirus, you may not qualify for the best rates when you first apply for long-term care insurance. 
  • Moving out of a nursing home. If you have a policy and want to move out of a nursing home, you will need to check what your policy will pay for. Some policies pay for long-term care in a variety of settings, including home care, but others are more restrictive. On the plus side, you may be able to use your policy to reserve your bed, allowing you to keep your nursing home spot.
  • Home care. If you have a policy that was paying for home care, there may also be changes. Some home care workers are charging more for work during the pandemic, which could exceed your policy coverage. Another change may be to the number of people entering your home. You may want family to provide care, rather than an outside home health care worker. Unfortunately, most long-term care policies don’t pay for family members to provide care. However, if you aren’t using the insurance to pay for care, your coverage may last longer–depending on the policy. 

There are lots of uncertainties regarding long-term care, insurance, and coronavirus. To read the full US News and World Report article about what we do know, click here.