Paying for LTC > Private Financing > Other Options > Evaluating Your Options Long-Term Care Insurance Other Insurance Reverse Mortgages Other Options

• What Is a Long-Term Care Annuity?
• What Is an Immediate Long-Term Care Annuity?
• What Is a Deferred Long-Term Care Annuity?
• Continuing Care Retirement Communities (CCRCs)
• Can I Save on My Own for Long Term Care?
• What Is a Trust?
• What Types of Trusts Can Help Pay for Long-Term Care?
• What Is a Charitable Remainder Trust?
• What Is a Medicaid Disability Trust?   

An annuity is a series of regular payments over a specified and defined period of time. The funds for the annuity come from a single premium payment that the individual makes at the outset. Two types are available:

• Immediate long-term care annuity
• Deferred long-term care annuity

For a single premium payment you make to an insurance company, you receive a specified monthly income. It is available to you without regard to your health, so if don't qualify for long-term care insurance because of age or poor health or if you are already receiving long-term care, you can still purchase an annuity. The single premium payment is converted to a monthly income stream that is guaranteed either for a specified period of time or for the life of the individual receiving the payments. The payout schedule varies based on the amount of the initial premium, your age, and gender. Generally, because of their longer life expectancy, females receive a smaller monthly payment over a longer period of time than do males of the same age.

Important Considerations:

• The annuity amount you receive may not be enough to pay for your long-term care expenses.
• Inflation may make the monthly income you receive from the annuity less than what you need.
• The tax implications of an annuity are complicated. Consult with your tax professional before purchasing one.

This type of annuity is available to individuals up to age 85. Similar to other annuities, for a single premium payment, you receive a stream of monthly income. The amount you receive depends upon your health. The annuity creates two funds: one for long-term care expenses and another separate cash fund to be used however you desire. The “long-term care” fund can be accessed immediately, while access to the “cash” portion is deferred and more limited over time. The rules of the annuity define how much you can access on a monthly basis from the long-term care fund, and how much you can access on an annual basis from the cash fund.

To qualify for this type of annuity, there are seven broad health criteria. However, most people will qualify even if they do not qualify for long-term care insurance.

Important Considerations:

• If the long-term care fund is not used, it can be passed to your heirs.
• The annuity may not be enough to pay for your long-term care expenses.
• Inflation may make the monthly income you receive from the annuity less than what you need.
• The long-term care portion of the annuity does not satisfy the requirements for a tax-qualified long-term care policy, so there is a risk of being taxed on the money from the fund that is used for your long-term care expenses.
• The tax implications of an annuity are complicated. Consult with your tax professional before purchasing one.

A Continuing Care Retirement Community (CCRC) is a community living arrangement, typically on a single campus, that provides housing, health care, and social services, usually for older people. CCRCs offer different levels of care ranging from independent housing to nursing home care.

• Depending on the type of CCRC, it can be a financing option for long-term care services, as well as a living arrangement and a means of obtaining long-term care services more easily.
• You can move into a CCRC even if you need no care and live independently in your own housing unit.
• If and when you need more care, you move from independent housing to the assisted living unit or to the nursing home, depending on your needs.
• In addition to a monthly fee based on the size of your independent living unit, most CCRCs also charge a one-time entrance fee.
• In some CCRCs, you pay an additional amount for care when you move to the assisted living or nursing care facility; in others, your monthly fee is all-inclusive and does not increase even if you move to a different living setting where you can receive long-term care services.
• Monthly payments and contracts vary widely.

Important Considerations:

• Many CCRCs provide care in the assisted living unit or nursing home, but may provide little or no care in an independent living unit.
• Some CCRCs allow you to hire your own home health care services while you live in an independent living unit; others require you to be fully independent to remain in an independent living unit.
• Health screening is often required before you can move into the independent living unit. Some CCRCs allow married couples to move into an independent living unit even if one spouse requires some care.
• CCRCs tend to be expensive.
• The campus/community lifestyle is not for everyone.

Most people don't realize how difficult it is to save enough money to pay for long-term care. Use the long-term care savings calculator to see how much money you would have to save on your own to accumulate enough money to pay for long-term care under a variety of scenarios. Choose the one that's most appropriate for your personal situation.

A trust is when a person (the trustor) transfers something of value (the asset) to another person (the trustee). Once that takes place, the trustee manages and controls the asset for the benefit of the trustor or for a named beneficiary.

One use of a trust is to provide flexible control of assets for the benefit of minor children. Another is to provide flexible control of assets for the benefit of an elderly or disabled person, including yourself or your spouse.

• Charitable Remainder Trusts
• Medicaid Disability Trusts

These trusts allow you to use your own assets for long-term care with the added benefit of reducing taxes. This type of trust is typically used by wealthy people with specific types of assets that they donate to a public charity at fair market value. The individual making the donation receives a tax deduction on the amount that has been gifted. The donor then receives payments from the trust that can be used to pay for long-term care. Once the donor dies, the balance of the funds in the trust go to the charity.

Important Considerations:

• The funds available to you are based on the amount of your donation. These payments are only likely to be large enough to help pay for long-term care expenses if you have donated a substantial amount of money to the charity.
• A Charitable Trust may not provide enough income to pay your long-term care expenses.
• The donation may affect your Medicaid eligibility.

The purpose of a Medicaid Disability Trust is to enhance the quality of life of an individual with a disability who also qualifies for public benefits. Medicaid Disability Trusts are limited to disabled persons under age 65. With this type of trust, assets are managed by a non-profit organization. The trust may be established by a parent, grandparent or legal guardian for the benefit of the disabled person. This is the only kind of trust that is exempt from rules regarding trusts and Medicaid eligibility.

Important Considerations:

• If Medicaid benefits are paid on behalf of the individual, any amount remaining in the trust at the individual's death can be recovered by the state.
• There are complex tax implications. Consult your tax professional when considering establishing a Medicaid Disability Trust.