If you want to be able to leave a suitable legacy to your loved ones, you have to avoid extreme costs that can have devastating impact late in your life. Nursing home bills would fit this description, and unfortunately, Medicare does not cover custodial care.
Medicaid will pick up the tab if you can gain eligibility, and in fact, 65 percent of elders that are in nursing homes are enrolled in this program. However, it takes careful advance planning to gain eligibility without losing anything in the process.
There are some eye-opening figures that you should digest to fully understand the subject, and we are going to share them in this post.
70 Percent/35 Percent
You may not be too worried about long-term care costs because you assume that you will be able to handle your own activities of daily living every step of the way. In fact, the statistics tell a different tale.
According to the United States Department of Health and Human Services, 70 percent of seniors will need living assistance of some kind. Many of these folks will be able to get by without entering a nursing facility, but 35 percent of seniors eventually require nursing home care.
$155,125 a Year
If you have to pay for a stay in a nursing home out of your own pocket, you are looking at a difficult situation. Genworth Financial conducts surveys on an annual basis to gauge the state of long-term care costs around the country.
They have found that the median annual cost for a year in a nursing home in Manhattan, New York was $155,125 in 2020. The figure for an in-home health aide was just under $60,000 a year. These are the median numbers, so top-quality care could cost considerably more.
The average length of stay for people in nursing homes is 12 months, and a stay of this duration would generate some hefty costs. About 19 percent of seniors that receive paid care need it for one-to-two years, and 21 percent are in the two-to-five year range.
Researchers found that 13 percent of individuals that are receiving professional care need the assistance for more than five years.
There is an asset limit that you must stay under if you want to qualify for Medicaid to pay for long-term care. In most states, it is just $2000, but the limit in New York is $15,900 in 2021.
Some things that you own do not count, including your home, but there is an equity limit of $906,000 in our state. One motor vehicle is not counted, along with your personal belongings and household items.
Wedding and engagement rings and heirloom jewelry are non-countable, and you can have unlimited term life insurance. Prepaid burial plots are allowed along with $1500 of whole life insurance and the same amount of cash tucked away to help cover final expenses.
When a married person is entering a nursing facility while their spouse is still capable of independent living, the healthy spouse can keep half of the shared assets that are countable.
This is called the Community Spouse Resource Allowance, and the maximum allowance is $130,380. There is a minimum allowance of $74,820, so a healthy spouse can keep this amount even if it is more than half of the community property.
The income that is brought in by the spouse that is entering a nursing home must be contributed toward the cost of the care, but they do get a $50 a month personal needs allowance. This rule does not apply if a healthy spouse needs the income to maintain a decent standard of living.
They can receive a Monthly Maintenance Needs Allowance, and the maximum allowance this year is $5259.50.
There is a five-year Medicaid look-back period. You can fund an irrevocable trust to get assets out of your name to qualify for Medicaid, but you have to fund the trust at least five years before you apply.
While you would not be able to touch the principal, you could continue to receive income that is generated by assets in the trust until you submit your application for Medicaid coverage.
Schedule a Consultation Today!
We are here to help if you are ready to work with a New York City elder law attorney to put a nursing home asset protection plan in place. We can be reached by phone at 212-973-0100, and you can fill out our contact form if you would like to send us a message.