What is the difference between Long-term care insurance (LTCI) and the Medicaid Asset Protection Trust (MAPT)?

LTCI protects your assets and income from the costs of care, as pays for a caregiver in your home or helps pay for the assisted living facility. The MAPT protects assets, like your home and your life savings, but it does not protect your income (pensions, social security, interest, dividends, etc.). The MAPT has no positive effect in terms of providing care.

However, in the event LTCI is unavailable to you for medical or financial reasons, the MAPT is a wonderful tool. With the MAPT in place five years before you go into a nursing home your assets are protected. Consequently, Medicaid will pay for the cost of care, over and above what your income provides.

Our stated preference for clients is LTCI, if available. Most clients would prefer to “age in place” or, in other words, stay in their own home and receive home care if needed. Here, the LTCI stretches your dollars, to allow you to remain in the home for years more than you might have been able to afford otherwise. If your spouse is unable to care for themselves, it allows you to call in extra help so that you do not wear yourself out acting as a caregiver in your later years.

Some clients have adopted a hybrid approach when it comes to LTCI and the MAPT. They purposely underfund the LTCI, say taking a $200/day benefit ($6,000/month) instead of a $400/day benefit ($12,000/month). They also establish the MAPT and transfer their assets to the trust. The thinking is that the $200/day will pay for the home care that they may need and want, at half the cost of the full policy. On the other hand, if they end up in a nursing home, they won’t lose their assets due to the $6,000/month they may be short, and Medicaid will pick up the difference.

There are no right and wrong answers in deciding which road you take when considering protecting your assets from the high costs of long-term care. We have found, however, that an open discussion between the client and an elder law attorney, with all of the facts and circumstances on the table, often yields the most satisfactory result.

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