The most important matter that elder law attorneys address is the long-term care situation.
Most senior citizens will need some type of help with their activities of daily living eventually. Some of them can receive the assistance they need in their own homes from family members and friends, but residential long-term care will often become necessary at some point.
Since Medicare is a health insurance program for seniors, and many elders require nursing home care, you may assume that Medicare would cover it. In fact, Medicare will not pay for the custodial care that nursing homes provide.
New Long-Term Care Cost Survey
Now that 2020 is in the books, Genworth Financial has been able to evaluate their long-term care cost data for last year, and the results have been released. On a national level, the median annual charge for a private room in a nursing home was $105,850 in 2020.
Obviously, everything is more expensive in New York City, and this extends to costs associated with long-term care. Here in the City, the median annual charge for a private room was $155,125 according to this survey.
For a semi-private room, the median cost was $141,255. Some people can get the help they need in their own homes from a home health aide, and the median annual charge for that service was just under $60,000 last year.
According to the United States Department of Health and Human Services, 21 percent of people that need paid care receive the assistance for between two and five years. They found that 13 percent of senior care recipients incur costs for more than five years.
When you do the math, you can see that the numbers can get rather large, and married couples may be confronted with two different sets of nursing home bills.
The widely embraced solution is Medicaid eligibility. Since it is a need-based program, you can’t qualify if you have significant assets in your name, but some assets do not count.
Your home is not a countable asset, with an equity limit of $906,000 in 2021. One motor vehicle, wedding rings, engagement rings, and heirloom jewelry are not counted. The items that you have around your house and personal belongings are not countable assets either.
You can have up to $1500 of whole life insurance and the same amount set aside for final expenses. Unlimited term life insurance is permitted, because it has no cash value.
There are a couple of allowances for a healthy spouse when their spouse is applying for Medicaid to pay for long-term care.
One of them is the Community Spouse Resource Allowance that is equal to half of the shared countable assets up to a certain limit. In 2021, the limit is $130,380.
When a single person is applying for Medicaid, their income must be contributed toward the cost of the care that is being received. This requirement is set aside when the healthy spouse needs the income to maintain a reasonable standard of living. They can receive a Monthly Maintenance Needs Allowance, and the maximum allowance this year is $3259.50.
To account for the assets that are countable, you can establish a Medicaid trust. This would be an irrevocable trust, and you would not have access to the principal. You would be able to receive distributions of the trust’s income until you apply for Medicaid.
Advance planning is the key to the successful execution of this strategy, because the trust must be funded at least five years before you submit your application for Medicaid coverage.
Medicaid Waiver for In-Home Care
There is also a Medicaid Waiver that will pay for in-home care if you can receive the assistance you need in your home. Traditionally, there was no look-back period, but a new law will implement a 30 month look-back.
However, it is not going into effect until January 1, 2022, so you still have time to take advantage of the opportunity if it applies to you or someone in your family.
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We are here to help if you are ready to implement a nursing home asset protection strategy. You can send us a message to request a consultation appointment, and we can be reached by phone at 212-973-0100.