Final Expenses

People often make plans for paying final expenses. They respond to TV ads for final expense insurance, or they buy a “no peek” small dollar life insurance policy with the idea that their spouse or kids will use the money to pay final expenses. This is all premised on the myth that they will die suddenly and that they will be able to afford the low monthly premium on the policy.


But then they wind up in the hospital, released to a rehab, and transitioned into long term care. All of a sudden for a single Nursing Home Medicaid applicant their entire income becomes “applied income” and they wind up with a personal needs allowance (apx $60 /month) paid over to the nursing home patient escrow account. If a couple has income over the minimum monthly needs allowance, then the spouse at home gets to keep up to $2,980.50 per month of the couple’s income and then the balance is paid over to the Nursing Home as “applied income.” This changes all the cash flows.


Cash flow to pay debts, service policies, pay expenses is often a problem when long term care bills come knocking at the door. Without Nursing Home Benefits under Medicaid these expenses are devastating, but even with Medicaid, cash flows have to be carefully considered before choosing solutions based on old fashioned notions of how things work. With the effective repeal of the estate tax many people think that planning for the future is no longer required. That is because most people do not anticipate a long term care stay. Planning for the future, for the final stage of life, is more important now than ever. It can make the difference between decimation of a life’s earnings and leaving a real legacy.

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