Question is for Gabriel Heiser.
My only money to pay for the NH is the life insurance policy for my husband. Cash Value is $76,653. That would pay for almost a year, but the IRS is going to take 1/3 for taxes. Is there any way of getting around this! It just makes it all that much sooner that I will have to apply for Medicaid. I don't understand. I also have a 301 K annuity for myself ....surrender value $41,000 and a life insurance policy on myself cash value $13,796. No savings. We do both have SSI and small pensions. What advice do you have for me?
One thing about the taxes, yes there will be capital gains tax on any gains, and yes you can deduct medical expenses-- but the deductible amount for medical is only the portion that is over 10% of income. So if income is $50,000 you can deduct the amounts over $5,000 (the first $5,000 isn't deductible).
Your situation as you describe is actually very hopeful, you have some good assets, and your husband will be able to receive care at a facility --but may have to spend down your joint assets to that approx. $114,000 figure. You can also pre-pay your funeral, your husband's funeral, check with your state DHS for the amount you can pre-pay. I hope you do find a good elder care law office that has experience with taxes and Medicaid, to put your mind at ease. The last thing you need at this time is stressing over the finances! Best wishes.
Look at it this way: LIFE INSURANCE answers this question: "How will my family survive without me?" It's needed if you have dependents who would suffer financially if you died.
LONG-TERM HEALTH INSURANCE answers this question: "Who will take care of me, and how will I pay for it?" Having a financial plan to pay for care on your own, gives you more choice in the type of treatment you can receive and where you want to receive it.