Long-Term Care Planning
We regularly have clients tell us that they want to be taken care of in their own home if they can no longer live on their own. This is completely understandable, as most of us do not relish the idea of living out our remaining years in a nursing home or assisted living facility. For those fortunate enough to have friends or family members who are willing to take on the duty of caregiver we should consider what, if any, compensation will be paid for those services. Simply giving them casual payments may cause problems when at-home care is no longer possible, and assistance is needed to meet the monthly costs of care in a long-term care facility. Our properly crafted Caregiver Agreement will permit payment to the non-professional caregiver and avoid these problems.
COSTS OF LONG-TERM CARE – IS THERE HELP?
Today the costs of skilled nursing care in East Central Indiana can easily exceed $8,000 per month. At close to $100,000 per year a life’s hard work and savings can be gone in an instant.
Medicare is only available for Rehabilitation following a 72-hour hospital stay. We have a maximum of 100 days of Rehabilitation care during our lifetime; it does not renew with subsequent hospitalizations or illnesses. Medicare does not cover the ongoing costs of a nursing home stay.
Long-Term Nursing Home Insurance is available, however, by the time most of us begin to consider the consequences of needing this type of insurance the premiums are simply too expensive.
Self-Pay is how most of us will cover the costs of a long-term stay in the nursing home until such time as our assets are depleted and we have to turn to Medicaid.
WHAT IS MEDICAID?
Medicare and Medicaid are distinctly different programs. Medicare is a federal health insurance program generally available to all persons of age 65 (and some younger depending upon the disability or disease). Medicaid is a federal program that covers medical costs for persons who meet strict asset and income standards. Unlike Medicare, Medicaid will cover a substantial portion of the costs of long-term nursing care.
While Medicaid has strict asset and income guidelines there are many allowances, here are just a few:
- A person can qualify for Medicaid and keep their home if they have a spouse who is living in the home.
- A person can qualify for Medicaid and keep their home so long as they have an “intention to return to the home” and they have no more than $713,000 in equity in that home.
- A person can qualify for Medicaid and own a motor vehicle even if they are not capable of driving.
- A person can qualify for Medicaid and own income-producing property.
- A person can qualify for Medicaid and have a spouse who has earnings/income.
- A person can qualify for Medicaid and keep their personal belongings.
DO NOT APPLY FOR MEDICAID UNTIL YOU SEEK ADVICE FROM AN EXPERIENCED ELDER LAW ATTORNEY! Making an application too soon can lock you or your loved one into a costly spend-down program leaving only $2,000 in cash or the like!
The key to preserving and protecting assets from the nursing home is to seek competent, experienced counsel as early as possible. However, even if a loved one is in immediate need of skilled nursing care or already residing in a long-term nursing facility, assets can still be protected through detailed Medicaid Planning.
Medicaid planning involves an analysis of the individual or couple’s income and assets. Thereafter we implement various strategies to expedite coverage under the program while preserving your assets. All too often people are misguided by social/case workers into an asset spend down to reach Medicaid qualification levels which leaves them in poverty.
We break down the Medicaid planning process into two categories: Advance Planning and Crisis Planning.
Advance Planning normally involves the use of an irrevocable trust into which assets are placed which the client wants to protect from the costs of long-term nursing home care, or for that matter any other creditors. The right to use the assets that are placed into such a trust can be reserved for the client as can the right to income which they generate. For example, a client might put rental property into such a trust and retain the right to receive the rent. A home or vacation property can be included in this type of trust, reserving to the client the right to reside in or use the property. The key to this type of Advance Planning is to have it in place 5 years prior to making an application for Medicaid coverage. So long as this strategy is properly and timely employed, the assets placed into one of these trusts will be wholly protected. Knowing that it is not always possible to meet that 5-year time frame, there are other strategies that can be employed to allow the client to “bridge the gap” to the 5-year deadline.
Crisis Planning techniques are used when we don’t meet the 5-year deadline or know at the outset that it simply isn’t possible. While we can’t categorically provide an accurate estimate of what can be preserved through these strategies, it is not uncommon for us to protect 50% to 60% of the assets that would otherwise be “spent down” paying for long-term nursing care. These strategies, which are customized to each client’s unique circumstances, can be used at any time; even when a person is already residing in a facility. Again, the key is to implement these strategies as soon as possible and in advance of applying for Medicaid.
BE PROACTIVE –
SEEK ADVICE FROM AN ELDER LAW ATTORNEY
The odds are not in our favor: According to government studies, a person who reaches the age of 65 this year has a 70% chance of requiring long-term nursing care before they die. These studies also show that on average a woman will be in a nursing home for 3.7 years vs 2.2 years for a man and over 20% of those who end up in a nursing home will remain there for over 5 years. Pre-planning and/or Crisis planning with the assistance of an experienced Elder Law Attorney will allow you to protect those assets you have worked a lifetime to acquire.