Long-Term Care Insurance vs. Medicaid Planning in Florida

“Mom can’t live alone anymore. How will we pay for her care?”

This question keeps many Florida families up at night. With nursing homes costing over $13,000 per month and in-home care running $25+ per hour, long-term care can quickly drain a lifetime of savings.

Most families have two main options to cover these costs: long-term care insurance or Medicaid planning. Let’s look at what each option means for you and your loved ones.

What is Long-Term Care Insurance?

Long-term care insurance is a policy you buy that helps pay for care when you can’t take care of yourself. It works like other insurance – you pay monthly or yearly premiums, and the insurance company pays for your care when you need it.

These policies typically cover:

• Nursing home care
• Assisted living facilities
• In-home care
• Adult day care
• Respite care for family caregivers

According to the American Association for Long-Term Care Insurance, the average annual premium for a 55-year-old is around $2,000-$2,500 per year. That might seem high, but remember that nursing home care can cost over $150,000 per year.

What is Medicaid Planning?

Medicaid planning means getting ready to use Medicaid to pay for long-term care. Medicaid is a government program that helps people with limited money pay for healthcare, including nursing homes.

The catch? To qualify for Medicaid in Florida, you must have very few assets – usually less than $2,000 for a single person (though some assets like your home may be exempt in certain cases).

Medicaid planning often involves:

• Legally moving assets to protect them
• Setting up certain types of trusts
• Making gifts to family members
• Converting countable assets to exempt assets

This type of planning needs to be done carefully and, ideally, well before care is needed, because of Medicaid’s “five-year lookback period.” This means Medicaid will check all financial moves made in the five years before applying.

Long-Term Care Insurance & Medicaid Key Differences

When comparing these two options, it’s not just about the money. The choice affects where you’ll live, what kind of care you’ll receive, and what you can leave to your family. Here are the biggest differences to keep in mind:

1. Who Controls Your Care Choices?

With Long-Term Care Insurance: You have much more freedom to choose where and how you receive care. Want to stay home with a private caregiver? Most policies cover that. Prefer a high-end assisted living facility? If your policy benefit is enough, you can choose that too.

With Medicaid: Your choices are more limited. Not all nursing homes or home care agencies accept Medicaid. Those that do might have waiting lists or Medicaid-only wings. You’ll have less say in your care setup.

2. Impact on Your Assets

With Long-Term Care Insurance: You keep control of your money and property. The insurance pays for care, so you don’t have to spend down your savings. This means you can leave more to your family or use your money as you wish.

With Medicaid: To qualify, you must have very limited assets. While there are legal ways to protect some assets through proper Medicaid planning, you’ll still have less control over your finances.

3. When to Start Planning

With Long-Term Care Insurance: You need to buy it when you’re still healthy, usually in your 50s or early 60s. Wait too long, and premiums get very expensive or you might not qualify at all due to health issues.

With Medicaid Planning: The earlier you start, the better. Because of the five-year lookback period, last-minute planning is much harder.

4. Cost Comparison

Long-Term Care Insurance:

• Predictable premiums (though they may increase over time)
• Typically $2,000-$5,000 per year, depending on age and coverage
• Once you need care, the policy pays up to its benefit limit
• You pay nothing or just a portion ofthe  care costs

Medicaid Planning:

• Legal fees to set up proper planning ($3,000-$10,000 typically)
• Possible loss of control over some assets
• Once qualified, Medicaid pays most care costs
• You contribute most of your monthly income toward care

These differences highlight why the “right” choice varies so much from family to family. What matters most to you—control, asset protection, flexibility, or affordability? Your answer will point you toward the better option for your situation.

Is Combining Both Options Possible?

Yes. Some families use what’s called a “hybrid approach.” Here’s how it might work:

1. Buy a smaller long-term care insurance policy that covers 3-5 years of care
2. Do Medicaid planning to protect some assets
3. If long-term care is needed, use the insurance first
4. When insurance benefits run out, transition to Medicaid

Certain types of long-term care insurance policies enhance Medicaid eligibility, so have an elder law attorney with Medicaid planning experience to review the policy your looking to purchase or looking to make a claim on.

This strategy can be especially helpful for middle-class families who can’t afford lifetime long-term care coverage but want to protect some assets.

Frequently Asked Questions About Long-Term Care Planning

If I already have health problems, can I still get long-term care insurance?

It depends on the health condition. Some health issues, like well-controlled diabetes, might just mean higher premiums. Others, like Alzheimer’s or Parkinson’s, will likely make you uninsurable. That’s why buying earlier is so important.

If I give my house to my children now, can I qualify for Medicaid right away?

No. Any gifts or transfers made within five years of applying for Medicaid may trigger a penalty period during which Medicaid won’t pay for care. This is why planning ahead is so important.

Will Medicare pay for long-term care?

Many people think Medicare covers long-term care, but it generally doesn’t. Medicare only covers limited skilled nursing care after a hospital stay, usually for up to 100 days. It doesn’t cover ongoing custodial care, which is what most people need.

Can I just give all my money to my kids right before I need nursing home care?

This is a common misconception. Because of the five-year lookback period, recent gifts can make you ineligible for Medicaid for a period of time. Proper planning needs to be done well in advance.

Making the Right Choice for Your Family

There’s no one-size-fits-all answer to the long-term care question. The best approach depends on:

• • Your age and health
  • Your financial situation

• Your family dynamics
• Your goals and values

For example, if you have significant assets you want to protect and pass on to your children, a combination of long-term care insurance and asset protection planning might make sense.

If you have modest savings and are already in your 70s with some health issues, focusing on Medicaid planning might be more practical.

How Berg Bryant Elder Law Group Can Help

At Berg Bryant Elder Law Group, we help Florida families make sense of these complex choices. We can look at your specific situation and help you create a plan that gives you the care you need while protecting what matters most to you.

Don’t wait until a crisis hits to think about long-term care. Call us today to start planning for a secure future.