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Planning for long-term care isn’t just about the care itself; it’s about protecting your assets and preserving your legacy.

In this episode of Money Wisdom, Jake Doser, CFP®, CPWA® and Nicholas J. Colantuono, CFP® explain how asset protection becomes critical at this stage, and why having a proactive plan can make all the difference.

Why Long-Term Care Planning Matters

A recent study found that 58% of people believe Medicare covers long-term care. In reality, Medicare’s coverage is limited and short-term. While many of us focus on planning for the enjoyable aspects of retirement, it’s equally important to prepare for potential healthcare needs.

With age, qualifying for coverage can become more difficult, and premiums often increase. By planning proactively while you’re healthy, you can secure more insurance options at better rates.

1. Traditional “Use-It-or-Lose-It” Policies

Traditional long-term care insurance works similarly to car insurance. You pay a monthly premium and receive coverage if an event occurs. The downside is that if you never need care, you lose that money. While the most affordable option, these policies often lack flexibility.

2. Hybrid Life Insurance Plans

Newer hybrid plans combine whole life insurance with long-term care coverage. If you never use the long-term care component, the death benefit goes to your heirs. If you do use it, the policy can cover nursing home care, assisted living facilities, or home health aides. Although these policies are versatile, they tend to be more expensive.

3. Hybrid Annuities

Some annuities let you use a lump sum to provide a death benefit and cover long-term care. Depending on the usage, the value of your coverage may increase. This is another flexible option if you’re seeking both asset protection and long-term care.

Beyond insurance, there are several legal tools that can help protect your assets:

Irrevocable Trusts

An irrevocable trust can shield assets from being counted for long-term care purposes. Funding a trust counts as gifting assets and triggers Medicaid’s five-year look-back rule. Therefore, it’s important to implement this strategy well in advance.

Gifting as a Planning Strategy

Transferring assets to family members can also protect your legacy. However, it can also trigger look-back periods and potential tax implications. Contrary to common belief, Medicaid doesn’t take everything. To qualify for Medicaid, you simply must spend down your assets.

Interested in building a simple, actionable plan for your retirement and investment success? Get your free Money Map book by texting “MAP” to 800-757-0436.