As elder law attorneys, we advise clients that have concerns about the eventualities of aging. There are a number of issues we address, but without question, the most important one is the matter of long-term care and the nursing home costs that go along with it.
Why is this such a big deal when the vast majority of seniors will qualify for Medicare coverage at the age of 65? It makes sense to assume that Medicare would pay for living assistance as medical care, but instead the type of care that you would receive in a nursing home is considered to be custodial care.
Medicare will pay for convalescent care when recovery is anticipated, but it does not cover the custodial care that is provided in long-term care facilities.
The vast majority of elders will someday need help with their activities of daily living, and many will spend the end of their lives in nursing homes. There are many underlying causes, but Alzheimer’s disease alone is enough to get your attention. It strikes one out of every 10 seniors and about 40% of people who are 85 years of age and older.
The State of Long Term Care Costs in North Carolina
There is a company that sells financial products for senior citizens called Genworth Financial, and they do a great deal of research to keep a finger on the pulse of the state of long-term care costs. They look at national figures, and they also drill down state-by-state, and they examine the costs in larger cities.
In Charlotte, the median monthly charge for a private room in a nursing home was $7665 in 2018. If you multiply this by the 12 months in a year, you are looking at an annual expense of $91,980. Sacrificing some privacy by staying in a semi private room is not going to save you much money, relatively speaking, because the annual median cost is $83,220.
Even if you could get the help that you need in your own home with the assistance of a home health aide, you would be looking at a cost of just over $48,000 a year. For a one-bedroom unit in a Charlotte area assisted living community, the median charge was $45,638 per year.
These numbers are not very encouraging as they stand right now, and the future does not look bright. According to Genworth, you can expect to see 2% per year increase in nursing home costs over the next five years, and the figure is 5% for assisted living communities.
Clearly, if you require long-term care 20 years from now, you have to assume that the figures will be much higher than they are today. You also have to consider the possibility of two rounds of nursing home costs impacting your family if you are married.
What Can You Do?
All of this sounds like a lot of gloom and doom, but there is some light at the end of the tunnel. Though Medicare will not pay for custodial care, Medicaid will assist with these costs if you can gain eligibility. In fact, most people in nursing homes are enrolled in the Medicaid program, and most of them were not financially needy throughout their lives.
Since there is a $2000 limit on countable assets, many people thing they will give gifts to loved ones to qualify for Medicaid to pay for long-term care. This is more complicated than it may seem on the surface because you usually have to complete the gift giving at least five years before you submit your application for coverage.
If you violate this rule, you have to wait out a penalty period that is tied to the amount that you gave away as it compares to the cost of long-term care in our state. To explain through a simple example, if you gave away enough to pay for three years of nursing home care, you would be ineligible for a period of 36 months. People who plan ahead before spending all the money do have options, though, whether they are planning well ahead or even last minute.
Schedule a Consultation Today!
Our doors are open if you would like to discuss Medicaid planning or any other elder law or estate planning matter with one of our attorneys. You can send us a message to request an appointment, and we can be reached by phone at 704-944-3245 (Charlotte, NC or Huntersville, NC), or for individuals in Kentucky, at (606) 324-5516 (Ashland, KY) or (859) 372- 6655 (Florence, KY).
John’s practice focuses on the use of Wills and Living Trusts in Estate Planning to help individuals protect their families and preserve their legacies after their deaths, but his practice also focuses on the critical issues of protecting individuals with dementia or other diminished capacity, assisting individuals in qualifying for Medicaid and other government benefits to offset the costs of long-term care, and providing special needs planning.
John is admitted to practice law in North Carolina, South Carolina, Kentucky, and Ohio, and he is accredited by the Department of Veterans Affairs.
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