Most of our clients are somewhat surprised when they find out how an elder law attorney can help them preserve their legacies for the benefit of their loved ones. We often hear many of the same questions when we interact with people here in our office, and this gave us an idea. In this blog post, we’ll share a hypothetical question-and-answer session between a client and a member of our firm.
Do a lot of people need nursing home care eventually?
One of the very best elder law resources on the Internet is LongTermCare.gov. The United States Department of Health and Human Services created this site. You can find a treasure trove of valuable information there, and they share a particular statistic that is quite shocking.
They have found that seven out of every 10 senior citizens will eventually need help with their activities of daily living. Many of them will ultimately spend their final days in nursing homes.
To understand why, you should understand the widespread nature of Alzheimer’s disease. It strikes about 40 percent of people that are 85 years of age and older. This is something that should get your attention because your life expectancy is at least 85 years if you are fortunate enough to celebrate your 67th birthday. Clearly, many people with Alzheimer’s disease are going to need long-term care, if not nursing home care, at some point in time.
Medicare will pay for a stay in a nursing home, right?
Since Medicare was created to provide a health insurance safety net for seniors, and most elders will eventually need long-term care, you would naturally assume Medicare would pay for it. Unfortunately, the program does not pay for the custodial care that you would receive in a long-term care facility or nursing home, and it does not pay for in-home care.
Are nursing homes expensive?
In Charlotte, NC, area, you can expect to pay more than $90,000 per year for a private room in a quality nursing home. And remember, the expenses would be doubled if you and your spouse eventually require nursing home care.
Do people who are not wealthy that require nursing home care simply go broke?
The answer is no, not if you plan ahead effectively with the assistance of an elder law attorney from our firm. Medicaid is another government health insurance program that does pay for long-term care. Of course, it is only available to people with sparse resources. The current countable asset limit for an individual in North Carolina is $2000.
So if you plan ahead for retirement and you have a nice nest egg to fall back on, you get no government assistance if you need long-term care in a nursing home. This is true even though you paid taxes to be able to qualify for Medicare. On the other hand, if you have next to nothing, you don’t have to worry about nursing home expenses. Many people would question the logic here, but that’s the system that is in place.
The good news is that you can take steps to qualify for Medicaid even if you still have a some assets. The first thing to understand is that not everything you own counts. For instance, your home is not a countable asset during your lifetime — watch out for Medicaid estate recovery, though — but there is an $585,000 equity limit in 2019.
Other non-countable assets include household items, personal belongings, wedding rings, engagement rings, and one motor vehicle. These are some of the assets that don’t count, but there are a handful of others.
Can I just give the countable assets to my children after I find out that I need nursing home care?
You can do this, but your Medicaid eligibility would probably be delayed. There is a five-year look back period, and this requires you to complete all gift giving at least 60 months before you submit your application for Medicaid coverage. If you violate this rule, you have to wait out a penalty period before you can become eligible.
The length of the penalty depends upon the amount of money that you gave away as it compares to the cost of nursing home care in North Carolina. For a simple example, let’s say that the state has determined that the average annual cost for nursing home care is $100,000. You gave away $200,000 the year before you applied for Medicaid. That amount would have paid for two years of nursing home care so your eligibility would be delayed by two years.
You cannot normally just give your assets away to your children, but the federal and state Medicaid rules do permit some planning options to preserve assets in appropriate circumstances if you talk with us before you spend the money.
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Our attorneys have created a very useful worksheet that you can obtain free of charge on this website. It can really help you understand the process, and you can click this link to obtain access to the download.
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