By: Paul Lorrah
How will we pay for the cost of long-term care?
With rare exceptions, Medicare does not pay for the cost of long-term care. At most, on certain occasions it will pay for only a portion of your stay and only for a limited time. Long-term care insurance can be expensive, and it may be difficult to obtain. Medicaid is a medical assistance program that will help you pay the cost of long-term care once you qualify. Veterans aid and attendance benefits are available to Veteran's and their spouses.
Planning ahead is the best way to preserve assets from the high cost of nursing homes and long-term care. A solid asset protection plan will allow your parents to protect their savings and home for each other. In the event one spouse must enter a nursing home, the other spouse's quality of life must be protected.
Long-term care costs continue to rise each year. According to Genworth's cost of care, the average for at-home care is $4,100/month, assisted living is $3,800/month and skilled nursing is $7,200/month for a shared room, and depending upon the state that you live in it can be much higher. We have offices in Delaware, Maryland, Pennsylvania and New Jersey - each of those states have much higher averages with skilled nursing as much as $12,000 per month.
At those rates, the average family will deplete their savings very quickly and the last thing anyone wants to do is leave their spouse broke with no means of support.
What can we do?
A solid Asset Protection Plan is essential in today's world. An asset protection plan will allow you to preserve your savings, investment, life insurance and most important, your home.
What makes this plan most effective is when you combine it with the medical assistance programs that are available such as Medicaid and Veterans benefits. Both of these programs have financial eligibility requirements, however when a proper plan is in place, when the time comes for a spouse to require long-term care services on paper, they will qualify for these programs, but in reality they will still have all of their savings and home tucked away in an Asset Protection Trust.
If planning ahead, single individual can enjoy all of the same protection techniques available to married couples.
What if we didn't plan ahead?
Many of our clients come to us with a loved one needing long term care who didn't plan ahead, and although there are still many techniques available to preserve some of the assets, the cold hard truth is that in most cases you will not be able to preserve all of the assets. So, if you did not plan ahead, please call us, there are still options available to you, but my no means is that a reason to neglect planning ahead if you still have time.
What do you mean by planning ahead?
If your plan is to utilize the Medicaid program, there is a 60 month "look-back period" [30 months in California] which means the Medicaid agency will examine all of the applicant's financial records for the previous 60 months from the day the application is submitted. Because of that, you want to put a solid plan in place at least 60 months before you will actually need long-term care. Now we can't always predict when we will need long term care but a plan that is put into place before an individual is actually receiving long term care or just as they begin needing a very low level of assistance will usually survive the 60 month period and this will also depend on a person's current savings and income.
Does Medicaid have an estate recovery?
Yes. What this means is, if an individual passes away after receiving Medicaid benefits the Medicaid agency will pursue reimbursement for those benefits paid on behalf of that individual. So, if John was receiving Medicaid benefits to pay his nursing home costs of $5,000 per month and e passes after 1 year, the Medicaid agency will attempt to recoup that amount [$60,000] from his estate. If John owned a home with his spouse, the Medicaid agency may place a lien on their home in that amount. However, it John and his spouse had pre-planned and placed their home in a Medicaid Asset Protection Trust, it would be safe from estate recovery as well as all of their other assets.