QUESTION:

What advice do you have about preserving your nest egg in this situation?

My husband is 69 and I am 55.  We have two ninth graders who are college bound.  I am concerned about the risk of my husband having a major medical problem requiring long-term nursing care which would deplete our available reserve for college.  I had encouraged him to buy long term care insurance to protect our assets if we confront this dilemma, but since then he has developed a medical profile which makes the cost of insuring him too cost prohibitive for us:  type 2 diabetes, hypertension, high cholesterol -- all indicators for risk of stroke.  I have recovered from non-invasive cancer and am also ineligible.  Other pertinent information:  My husband will be retiring this year with a pension that includes a survivor benefit.  Our two houses are paid off.  I am concerned that what we have saved for college for two kids will instead end up going to a nursing home sometime in the next eight years.  Any advice? 

Ever, ever, so complex!



ASK YOUR MONEY’S ROSEMARIE BOYD ANSWERS:

Dear "So Complex:"

In reviewing your question, it would appear that you have issues beyond just the college money.  You also have two homes which need to be protected.  The only way to be sure that you are doing what you need to do to protect those assets, it is important that you seek the advice of an attorney who specializes in Elder Law.  Medicaid laws change frequently and only a specialist in that area will be able to be current with the most recent laws.  Google to the NAELA web site and you will be able to find someone in your area.   Once you do BE SURE TO ASK FOR REFERENCES!!

I do have some general observations concerning your situation:

1.       Health issues do not necessarily rule you out as a potential candidate for Long Term Care Insurance.  A lot depends on medications, how controlled the disease is and which company you are dealing with.    It would be to your advantage to speak to someone who specializes in this type of insurance.  The person should be an independent broker and not represent a specific company.

In choosing a company from whom you will purchase your Long Term Care policy, make sure you are dealing only with a company rated A+ or better, by AM Best.  Don’t be talked into dealing with a lesser rated company.  You want to be sure that, after years of paying premiums, the company will still be there to honor its commitment and also not continuously raise rates.  A major player in the business, and one who has been in the business for some time, is John Hancock.  They are A+ rated.

2.       Relative to the education savings, the general rule in Massachusetts is that the healthy spouse is allowed to keep 50% of the cash up to a maximum of $100,000.  There are also some strategies in dealing with the excess beyond the 100K.  However, as I stated earlier, this is something that depends upon your state of residence and only an Elder Law attorney will be able to structure properly.

3.       Finally, under current law in Massachusetts, if you own a LTC policy with a minimum benefit of $125 per day, they will not put a lien on your primary residence. Again, if you are not a Massachusetts resident, check your local state law.

As you can see, there is a lot to consider, given your situation.  There are no simple answers in this case, regardless of what well-meaning friends and family members may tell you. That is why it is important  to get expert help!

Best of luck!  If you have more questions, please feel free to let me know.

Rosemarie A. Boyd, CFP

You might also be interested in these articles:

• How Not To Fall This Fall
• Bias Against Hiring the Unemployed is Legally Risky
• Companies' sights on aging consumers
• Hire learning
• Boomers Do Embrace New Technology

NowAGrandma This is a good reminder that we all need to stay up to date on Elder Law. Once a year it is good to review your financial situation, at tax time you should take the time to talk to an advisor or accountant to make sure you are up to date, and make changes as your life and lifestyle change.

Apr 23, 2011, 11:28 AM EDT

Leave a Comment

Guidelines: We welcome your thoughts, but for the sake of all visitors to AfterFiftyLiving.com, please refrain from the use of obscenities, personal attacks or slurs. All comments are subject to our terms of use and may be removed. Repeat offenders may lose commenting privileges.