When you are entering into your active retirement years, you are embarking on a stage of life that can be very rewarding on several levels. If you are so inclined, you get to cross things off your bucket list, enjoy leisure activities, and spend quality time with your family and friends.
You also have the ability to sit back and reflect on the hard work and intelligent planning that got you to that point, and the sense of accomplishment is a satisfying feeling. This can be punctuated by the knowledge that you will be able to pass along a suitable legacy after your passing.
This is well and good, but it is important to understand a looming threat that can have a heavy financial impact on your twilight years, and we will look at it here.
Aging and Long-Term Care
According to the Social Security Administration, the life expectancy for a man that is celebrating his 67th birthday today is 85 years, and it is 87 years for a woman. A lot can change during those 20 years.
Alzheimer’s disease strikes over 30 percent of people that are 85 years of age and over, and this is not the only cause of incapacity. Clearly, many people require living assistance when they reach advanced ages, and this is something that you should take very seriously.
Long-Term Care Costs
You can expect to pay over $150,000 for a year in a nursing home in the Manhattan area, and 13 percent of people that require paid care need it for more than five years. One in five care recipients accumulate long-term care costs for between two and five years.
Overall, the average length of stay is one year, so the costs can be very significant. And of course, married couples can potentially face two different sets of nursing home bills.
Medicare does not cover the custodial care that nursing homes provide, and it will not pay for in-home care, so this is not the solution.
Nursing Home Asset Protection
Fortunately, it is possible to execute a nursing home asset protection strategy that revolves around Medicaid eligibility. This is another federal/state government administered program that will pay for custodial care if you can gain eligibility.
Since it is a need-based program, you can’t qualify if you have significant assets in your own name. However, you could position your assets wisely with future Medicaid eligibility in mind.
You could establish and fund an irrevocable Medicaid trust. The principal would no longer be accessible to you, and you would not act as the trustee. Until you apply for Medicaid, you would be able to receive distributions of the trust’s earnings to ensure your comfort.
Timing is the key to the successful execution of this strategy, because there is a five-year lookback period. The funding of the trust must take place at least 60 months before you submit your application for Medi-Cal coverage.
We should point out the fact that there is also a New York community Medicaid program that will pay for in-home care for seniors that can receive a nursing home level of care in a residential setting.
Traditionally, there was no lookback for community Medicaid in New York. A 30-month lookback was put in place back in 2020, but the implementation date keeps getting pushed back.
At the present time, we can tell you that it will not likely to be implemented until April 1, 2024 at the earliest. This means that you have a limited window of opportunity to apply with no lookback if your physician attests to the fact that you need in-home custodial care.
Attend a Free Webinar!
Attorney S.J. Khalsa has found that informed people tend to address important elder law and estate planning matters that are often put on the back burner. With this in mind, we provide educational opportunities through our webinars.
There is no admission charge, so this is a great investment of time that can pay dividends in the long run. You can see the schedule if you head over to our webinar page, and when you identify the session that you would like to attend, follow the simple instructions to register.
Need Help Now?
If you have already decided that it is time to work with a Manhattan, NY elder care planning attorney to put a plan in place, we are here to help. You can send us a message to request a consultation appointment, and we can be reached by phone at 212-973-0100.