Elder Law Attorney Can Help Plan for Long-Term Care Costs
Elder Law Attorneys Help Plan for the Devastating Costs of Long-Term Care

Elder Law Attorney Can Help Plan for Long-Term Care Costs

The odds are that most of us will need long-term care. At least 52% of those over age 65 will need some type of long-term care at some point in our lives, according to a study conducted by AARP. As most of us are living longer, we’ll probably need that care for a longer period of time, as reported in the article “It’s best to plan for long-term care” from the Times Herald-Record. An elder law attorney can help plan for long-term care costs.

Here’s the problem: ignore this issue, and it won’t go away. This is a fairly common response for people 55 and older. The size of the problem makes it a bit overwhelming, and the cost to tackle it seems unsolvable. However, not addressing it becomes even more expensive. How can we possibly pay for long-term care insurance?

Here’s a simple example: a 64-year-old woman who broke her ankle in three places. She was healthy and mobile. However, a badly broken ankle required extensive rehabilitation and she was not able to stay in her home. She has been living at a rehabilitation center and the costs are mounting. What could she have done?

There are two basic ways (with a number of variations) to pay for long-term care.

The first and most obvious: purchase a long-term care insurance policy. Only 2.7 million Americans own these policies. They are wise to protect themselves and their families.

Most families put off buying this kind of insurance, because it’s expensive at any age and stage. The average cost is about $2,170, according to the Kiplinger Retirement Report, for about $328,000 worth of insurance. That rate varies, and it should be noted that if you have a chronic condition, you may not be able to purchase a policy at all.

If a local nursing home costs $216,000 per year and you have $328,000 of coverage, you’ll run out of coverage. The average nursing home stay is about two years. As boomers age, the cost of long-term care insurance is rising, while benefits are becoming skimpier, says Kiplinger.

There are some alternatives: a hybrid life insurance plan that includes long-term care coverage.  However, those can be more expensive than regular long-term care insurance. Try about $8,000 a year for a 55-year-old, about $13,000 for a 65-year-old.

Another choice: a Medicaid Asset Protection Trust. You’ll need to work with an estate planning attorney to create and fund this trust long before you actually need it. Your assets must be placed in the trust five years before an application to Medicaid, which will then pay for your care. You don’t have to live in poverty to do this. If the care is for one person, the applicant is permitted to keep about $15,450 of assets. The spouse may also keep a home worth up to $878,000 and assets up to about $120,000. In New York State, you can keep the principle of retirement funds like an IRA or 401(k), as long as you are taking the required distribution withdrawals.

However, what if you have money to pay or need long-term care before you put assets in trust? If you live in New York, Florida and Connecticut, you have what is called “spousal refusal.” The spouse of the person in long-term care can choose not to pay for their cost of care. This can get complicated, and Medicaid will try to get funds for the care. However, an estate planning elder law attorney can negotiate the amount of payment, which may leave the bulk of your estate intact.

These are complicated matters that become very costly, often at a time when you are least able to deal with yet another issue. Speak with an estate planning attorney before you need the care and learn how they can help you protect your spouse and your assets.

Learn about the importance of making a long-term care plan.

Reference: Times Herald-Record (July 22, 2019) “It’s best to plan for long-term care”

Planning for the Impact of Medicaid
Medicaid Planning Can Protect the Family Treasure.

Planning for the Impact of Medicaid

One of the most complicated and fear-inducing aspects of Medicaid is the financial eligibility. The rules for the cost of Medicaid long-term care are complicated and can be difficult to understand. This is especially true when the Medicaid applicant is married, reports Delco Times in the article “Medicaid–Protecting Assets for a Spouse.”

Generally speaking, to be eligible for Medicaid long-term care, the applicant may not have more than $2,400 in countable assets in their name, if their gross monthly income is $2,313 or more. That’s the 2019 income limit.

There are Federal laws that mandate certain protections for a spouse, so they do not become impoverished when their spouse enters a nursing home and applies for Medicaid. This is where advance planning with an experienced elder law attorney is needed. The spouse of a Medicaid recipient living in a nursing home, who is referred to as the Community Spouse, is permitted to keep as much as $126,420 and a minimum of $25,284, known as the “Community Spouse Resource Allowance,” without putting the Medicaid eligibility of the spouse who needs long-term care at risk.

Determining the Community Spouse Resource Allowance requires totaling the countable assets of both the community spouse and the spouse in the long-term care facility, as of the date of admission to the nursing home. The date of admission is referred to as the “snapshot” date. The community spouse is also permitted to keep one-half of the couple’s total countable assets up to a maximum of $126,420 in 2019 and no less than the minimum of $25,284. The rest of the assets must be spent down.

Countable assets for Medicaid include all belongings. However, there are a few exceptions. These are personal possessions, including jewelry, clothing and furniture, one car, the applicant’s principal residence (if the equity in the home does not exceed $585,500 in 2019) and assets that are considered inaccessible, such as a spouse’s retirement accounts.

Unless an asset is specifically excluded, it is countable.

There are also Federal rules regarding how much the spouse is permitted to earn. This varies by state. In Pennsylvania, the spouse is permitted to keep all of their own income, regardless of the amount.

The rules regarding requests for additional income are also very complicated, so an elder law attorney’s help will be needed to ensure that the spouse’s income aligns with their state’s requirements.

These are complicated matters, and not easily navigated. Talk with an experienced elder law estate planning attorney to help plan in advance, if possible. There are many different strategies for Medicaid applications, and they are best handled with experienced professional help.

Read about some of the specifics of good Medicaid planning.

Reference: Delco Times (June 26, 2019) “Medicaid–Protecting Assets for a Spouse”

Thinking about Aging? Will You Need Long Term Care with Medicaid?
lderly Woman Worried About Long-Term Care Costs and Medicaid

Thinking about Aging? Will You Need Long Term Care with Medicaid?

Many people will end up needing assistance like Medicaid to care for themselves, as they become elderly and that help may not be provided by their children. It might be wise to look into long term care costs now and how Medicaid can pay for it, according to The Detroit News in “What to know about aging and long-term care costs.”

Here’s what often happens:

  • More than a third of seniors will need to stay in a nursing home, where the median annual cost of a private room has skyrocketed to more than $100,000.
  • Four out of 10 people will opt for paid care at home. The median annual cost of a home health aide is more than $50,000.
  • More than 50% of all seniors will incur some kind of long-term care costs, and 15% of those will incur more than $250,000 in costs, according to a study by Vanguard Research and Mercer Health and Benefits.

Medicare doesn’t pay for long-term care. Medicare does not cover what it terms “custodial” care. For most Americans, who have a median of $126,000 in retirement savings, that’s an immediate financial wipeout. They will end up on Medicaid, the government health program that pays for about half of all nursing home and custodial care.

Those who live alone, are in poor health, or have chronic conditions are more likely than others to need long-term care. For women, there are special risks, since statistically women outlive husbands and may not have anyone to provide them with unpaid care.

Everyone approaching retirement needs a plan. The options are:

Long-term care insurance. The average annual premium for a 55-year-old couple was $3,050 in 2019. The older you are, the higher the cost, and if you have chronic conditions, you may not qualify.

Hybrid long-term care insurance. Life insurance or annuities with long-term care benefits now outsell traditional long-term care insurance by a rate of about four to one. This requires committing a large sum of money up front but is a way to obtain long-term care insurance.

Home equity. Selling a home to pay for nursing home care is not the best solution. However, it may be the only solution, particularly if it’s the only asset. Reverse mortgages may be an option.

Contingency reserve. A wealthy family with assets may simply earmark some assets for long-term care, setting aside a certain amount of money in an investment that can be liquidated without penalty.

Spending down to Medicaid. People with little or no retirement savings could end up depending on Medicaid. There are ways to protect assets for spouses, but it requires working with an elder law estate planning attorney in advance.

Learn how planning for long-term care costs are factored into your estate plan.

Reference: The Detroit News (June 10, 2019) “What to know about aging and long-term care costs”