As elder law attorneys, we advise clients that have concerns about the expenses that they may face toward the end of their lives. Without question, long-term care costs are at the top of the list. It is natural to assume that Medicare would cover living assistance, but this is not the case.
Medicare will pay for convalescent care after an injury or illness when recovery is anticipated. However, it does not extend to the custodial care that is provided by nursing homes, and it doesn’t cover in-home care costs.
Deep Pockets Required
If you intend to pay for long-term care out of your own pocket if it becomes necessary, you better have deep pockets. According to a 2021 survey that was conducted by Genworth Financial, the median cost for a private room in a Manhattan nursing home is $158,775.
Clearly, a top-quality, in-demand facility is going to cost more than the median. Plus, you are looking at about $70,000 for an in-home caregiver, so these expenses can potentially obliterate your legacy.
What are the odds? Unfortunately, they are not in your favor. Just over half of seniors will incur long-term care expenses eventually, and 35 percent will move into nursing homes. If you do nothing because you think you will never need assistance, you are trying to defy the probability percentages.
Long-Term Care (LTC) Insurance
Now that we have provided the necessary background information, we can get to the point of this post. You can purchase traditional long-term care insurance in anticipation of future living assistance costs, but the value is questionable.
First, it is quite expensive if you obtain the coverage late in your life. A single female that is 65 years old will pay $2700 a year on average for $165,000 worth of coverage. The premiums increase by between 4 percent and 6 percent every year when you are in your 60s, and they go up from there.
Since about half of people never need long-term care, all this money can go down the drain. In addition to this distinct possibility, you have to consider the impact of the elimination period. If you file a claim, you are ineligible for 30 days, 60 days, or 90 days depending on the policy fine print.
There is now a hybrid LTC insurance option that includes whole life insurance. If you do not need long-term care, the policy provides a life insurance payout. However, this is significantly more expensive than the traditional insurance.
You can go in a different direction if you want to protect yourself from potentially brutal long-term care costs. Medicaid will cover custodial care if you can gain eligibility. In New York, there is also a Community Medicaid program that will pay for in-home care.
Since is a need-based program, you cannot qualify for Medicaid if you have more than $16,800 in countable assets. The “countable” qualifier is operative, because the healthy spouse is entitled to certain allowances, and your home, your vehicle, and wedding and engagement rings are among the non-countable assets.
If you are thinking you can give your children their inheritances in advance if and when you find out you need long-term care, the powers that be are one step ahead of you. There is a five-year look back period for Medicaid, and there is to be a 30-month book back for Community Medicaid .
You are ineligible for 60 or 30 months after you transfer assets out of your name, so advance planning is key. It should be noted that the Community Medicaid look back will not go into effect until October of 2022 at the earliest.
Schedule a Nursing Home Asset Protection Consultation!
This is a lot to unpack, but we are here to help you put it all into perspective. If you would like to schedule a consultation at our Manhattan, NY elder care planning office, reach out to Khalsa Law Firm through our contact page or give us a call at 212-973-0100.