Don’t Assume You Will Never Need Long-Term Care

Retirement planning can seem like it is completely focused on the active years that you will be able to enjoy shortly after you put your working years behind you. This is certainly an important consideration, and your golden years can be quite satisfying if you are properly prepared for them.

At the same time, it is wise to budget for the years that will follow when you are not as capable as you once were.

The United States Department of Health and Human Services tells us that seven out of every 10 seniors will someday need living assistance. While it is true that many elders get the help that they need in their own homes from family members and friends, eventually, professional living assistance may become necessary.

Nursing Home Care

There are a number of different reasons why people ultimately reside in nursing homes, and Alzheimer’s disease is probably at the top of the list. It strikes 32 percent of those over 80 years of age. In all, 35 percent of seniors will need nursing home care at some point in time.

Medicare and Long-Term Care Costs

Most people qualify for Medicare when they reach the age of 65. Since it is a health insurance program that is largely intended for senior citizens, you would assume that it would pay for long-term care.

Though it may be surprising, Medicare will not pay for long-term care. It will pay for convalescent care when recovery is expected, but it will not pay for the custodial care that nursing homes provide.

It is not easy to pay out-of-pocket unless your pockets are quite deep. The state of Kentucky places the average cost for a day in a nursing home at just under $200, and in North Carolina, it is $227.  That adds up in a hurry, and the average length of stay is 12 months.

When you mix in the fact that married couples may be looking at two different sets of nursing home bills, the expenses can be overwhelming.

Nursing Home Asset Protection

There is a widely embraced nursing home asset protection solution in the form of the Medicaid program. This government health insurance program does pay for long-term care if you can gain eligibility. Since it is a need-based program, the asset limit is just $2000.

This asset limit is quite low, but some of your property is not considered to be countable for Medicaid eligibility purposes. The most important exemption is your home. You can qualify as a homeowner, but there is an equity limit that stands at $595,000 in 2020.

We are not going to explain all of the different forms of property that are not counted here, but we will provide detailed information in a different blog post.

Lifetime Gift Giving

You can choose to give your loved ones their inheritances in advance in an effort to position yourself with future Medicaid eligibility in mind.

Direct gift giving is a possibility, and you can alternately choose to fund a Medicaid trust. It would be irrevocable so you would not be allowed to take the principal back. You would however be able to continue to receive income that is generated by assets in the trust.

This takes careful planning with the help of a legal professional because there is a five-year look back period. Your application will be denied if you have given large gifts within five years of the date that it was submitted.

Access Our Free Worksheet!

You reached this site because you are looking for information about estate planning and elder law topics, and you are in the right place. We offer a number of resources, and one of them is our carefully prepared worksheet.

This worksheet conveys a great deal of practical information in a simple, easy to understand manner. To get your copy, visit our worksheet access page and follow the simple instructions.