When it comes to long-term healthcare planning, there are a couple of different ways you can plan for your later years. One of these ways is through self-funding, where you plan to pay for the costs out-of-pocket. While this method can have several benefits, it is also costly, and planning must begin early.
Another way to plan for long-term healthcare is by utilizing Medicaid as healthcare insurance. This is the most common route, but you must plan to spend down or protect your assets in order to qualify.
Self-funding your long-term care
According to Forbes.com, self-funding your long-term care requires that you build up financial instruments which will allow you to afford the care you need. This can be a great option for people who are savvy with investments or already have a substantial nest egg built up. Because there are no income limits when it comes to self-funding, you do not have to worry about distributing your assets.
The downside of self-funding is that it is expensive. Long-term healthcare costs can easily cost over a million dollars and many people may not be able to afford this option.
Planning for Medicaid
Most people realize they will need some sort of long-term healthcare as they age. Medicaid planning is the most commonly utilized insurance program that helps people achieve these goals. Unfortunately, you must meet certain income limits in order to qualify for Medicaid. Most people must plan to set their assets and income into certain trusts in order to qualify for the federal program.
While it may seem simple to transfer assets to other people to qualify for Medicaid, you must do this at least five years before you plan on applying. You should plan for Medicaid well before you think you will need it to properly protect your assets.