People have a tendency to project strength, and this can be a positive attribute in many instances. However, as you get older, the air of invincibility can start to become dangerous because no one can escape the eventualities of aging.
You probably expect to be able to enjoy active pursuits during your retirement years, and it can be hard to imagine a time when you will have significant physical limitations. It becomes easier when you understand the life expectancy for someone in his or her mid-60s.
At that point, your anticipated longevity is somewhere in the mid-80s if you do not have any life-threatening health problems. When you digest this statistic soberly, you can see that your capabilities may change significantly during your retirement years.
The change in your ability to handle all of your responsibilities can come about rapidly after an injury or illness. You may be able to get limited help from family members and friends to take care of certain tasks, and this won’t cost you anything financially.
However, at some point, you may need some assistance from paid in-home caregiver, or you may require nursing home care.
The annual price tag for a private room in a Charlotte area nursing facility is in the vicinity of $100,000. In Ashland, Kentucky, the median cost for a private room was just over $85,000 in 2020.
Medicare and Custodial Care
Since most people do not think about the prospect of long-term care until it is unavoidable, some assume that Medicare will pay for it if you ever need it. This makes sense since Medicare exists to address the health care needs of seniors.
Unfortunately, this assumption is false — Medicare does not cover a long-term stay in a nursing home, and it will not pay for professional in-home long-term care.
Medicaid and the Home and Community Based Services Waiver
Medicaid has become the de facto source of long-term care insurance in the United States by default. This program will pay for custodial care if you become eligible, but it is only available to people with limited resources.
There is also a Medicaid Home and Community Based Services (HCBS) waiver that will pay for some in-home assistance.
In determining eligibility, your home and personal belongings are not counted along with one motor vehicle, but there is a $2000 limit on most assets. With regard to the home, there can be an equity limit that stands at $603,000 in Kentucky and North Carolina this year.
Medicaid Estate Recovery
If you qualify for Medicaid to pay for long-term care, the program will seek reimbursement from your estate after your passing. This is why you would have to take special steps to protect your home.
One exception to the recovery rule applies if your spouse and/or a dependent child is residing in the home at the time of your death, but with planning you may have other options for protection.
Five-Year Look Back Period
When you digest all this information, you may resolve to give your children their inheritances in advance if you find that you need long-term care. The powers-that-be do not want people to be able to do this, though, so there is a five-year look back period.
You can give gifts or convey assets into an irrevocable trust to remove assets from your name. However, you are generally penalized and your eligibility delayed if you divest yourself of assets in the five years before you submit a Medicaid application. If you cannot plan five years ahead of time, you still may have some options to preserve assets; but your options are more limited.
Take Action Today!
Because of the five-year look back period, you have to be proactive about the implementation of a nursing home asset protection plan. If you use a trust, in particular, you could continue to receive income that the assets generate, and this can help you maintain your lifestyle.
We can explain all the details if you schedule a consultation, and there is no time like the present. You can set up an appointment at our estate planning office in Ashland, Kentucky if you call us at 606-324-5516. Our number in Florence, Kentucky is 859-372-6655.
The number in Charlotte, North Carolina or Huntersville, North Carolina is 704-944-3245, and you can use our contact form if you would rather send us a message.