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Planning For Your Long-Term Care Needs

By Susan Johnston Taylor Thursday, May 9, 2024

Close-up of Jonathan Greeson, a man with close-cropped brown hair and beard, light skin, and wire-rimmed glasses.

Jonathan Greeson, CFP, is a financial planner.

The progressive nature of neuromuscular diseases means caregiving needs generally increase over time. Therefore, it’s important for anyone who lives with a neuromuscular disease — or has a dependent who does — to plan for long-term care.

“Start planning and saving as soon as possible,” recommends Jonathan Greeson, CFP, a financial planner who lives with spinal muscular atrophy (SMA). “I tell clients we have to find a balance between enjoying today and preparing for tomorrow. Healthcare will be a large expense for all people, but even more so for people with disabilities.”

Of course, long-term care includes more than just medical needs. It may also include help with daily living tasks when a person is unable to perform those tasks themselves, such as dressing, bathing, toileting, housekeeping, and preparing meals.

Due to the pandemic, a shortage of home care workers, and other factors, the cost of long-term care has been rising steeply. The average annual cost of a home health aide has increased 10% since 2022, and the Centers for Medicare and Medicaid Services expects these costs to continue rising.

In this environment, long-term care planning is more important than ever. Here’s a look at three strategies.

1. Protect Medicaid eligibility

Medicaid covers basic medical services and long-term care for people with certain incomes and disabilities. However, many people do not qualify because of strict income and asset limits, which vary by state. In many cases, having more than $2,000 in countable assets (a bank account, financial investments, or property) disqualifies a single person from collecting Medicaid, while $3,000 in countable assets disqualifies a married couple.

Many families use a special needs trust to maintain Medicaid eligibility while providing for needs that aren’t covered by public benefits.

“If a parent gives a disabled child a nice inheritance, the child will most likely become ineligible for Medicaid,” explains Jonathan. “This can be avoided by putting the inheritance in a trust, so Medicaid cannot count it as a resource.”

Medicaid planning and special needs trusts are complex, so Jonathan recommends consulting a lawyer who specializes in this area. The Special Needs Alliance has a directory of attorneys who specialize in special needs planning.

2. Choose a savings vehicle

Americans with disabilities that began before age 26 are eligible to set up an Achieving a Better Life Experience (ABLE) account. (In 2026, the age requirement will change to before age 46.)

ABLE accounts are tax-advantaged savings accounts that work similarly to a 529 college savings account.

If annual contributions are within $18,000, the ABLE account does not impact eligibility for Medicaid and other public benefits. An ABLE account owner who works and does not contribute to an employer-sponsored retirement account may make additional contributions up to an amount that varies by state.

“ABLE accounts are a huge step in financial freedom for people with disabilities, but they still have limits,” Jonathan says. “They are great for saving for a house, car, school, etc. However, for a larger expense like 24-hour care, the limits would be a hindrance. Paying for care alone could empty the entire account in one year.”

Other savings vehicles do not have these contribution limits, but they could impact eligibility for benefits. Use the directory from Special Needs Answers to find a planner who can provide guidance on savings vehicles.

3. Think about long-term care insurance early

Long-term care insurance policies usually work like auto or home insurance: You pay premiums as long as the policy is in effect and make claims if you ever need home health care, respite care, a residential care facility, or other covered services. Many companies that offer these policies will not medically underwrite someone who has been diagnosed with a serious condition or will charge them higher premiums.

Individuals who know an inherited neuromuscular disease runs in their family may consider purchasing a plan before they have genetic testing or exhibit any symptoms.

Some people may be eligible for an employer-sponsored group policy that does not require medical underwriting. However, if the employee leaves that job, they’ll need to pay the premiums on their own or lose the coverage.

An insurance agent or broker who focuses on long-term care planning may be able to help. Find insurance departments and local agents through the National Association of Insurance Commissioners state directory.

Look forward

Whatever option you choose, the important thing is having a plan for future care needs. With the right support, you’ll be prepared as your plans and needs evolve.

Susan Johnston Taylor writes about health and general interest topics.

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Disclaimer: No content on this site should ever be used as a substitute for direct medical advice from your doctor or other qualified clinician.