“Will My Mom Lose Her House?”
“Will the Nursing Home Take All of My Money?”
“Is It Too Late for Me to Give Away Money to My Children and Grandchildren?”
Paying for Long-Term Care
Long-term care can be provided in different settings. It can be provided at home, in assisted living facilities and in nursing homes. Sometimes, there are care settings where a senior can start in independent living and then move along to higher care levels, as needed.
There are essentially four ways to pay for care:
- Savings
- Long-Term Care Insurance
- Medicare
- Medicaid
Long-term care at home can cost as much as $8,000 a month, care in an assisted living facility may be $10,000 monthly and care in a nursing home can cost up to $15,000 a month. It is no wonder that most families cannot afford to meet these expenses for extended periods of time.
Long-term care insurance can be a great product to meet these needs, but if it is not purchased at a younger age, it is not a viable option for people in need of care. Medicare will cover a very small amount of time in a rehab facility, but does not cover ongoing long-term care expenses. And so, for many Americans, Medicaid has become the means of paying for this care.
The problem with Medicaid is that it is designed to be a welfare program, created over 50 years ago to meet the health needs of the very poorest Americans. Now, since people are living longer, and care is so expensive, middle-class families are looking to Medicaid to help cover the cost of care.
In order to be eligible for Medicaid, the applicant needs to be both medically eligible and financially eligible. In New Jersey, an applicant can have no more than $2,000 in his name. In New York, an applicant can have no more than $15,900. In both states, the well-spouse can keep up to $130,380 in her name and the primary residence is an exempt asset.
When one applies for Medicaid, 5 years of every bank statement and financial transaction that you and your spouse have made must be supplied to Medicaid. This is what is referred to as the 5-year lookback. If Medicaid sees that there were gifts made during those 5 years, also referred to as an “uncompensated transfer,” there will be a period of ineligibility imposed, during which time the applicant will not get Medicaid coverage. This can cause great hardship to families because the applicant has no funds to pay for care and now has a penalty applied.
What Can You Do To Plan Ahead?
Long-Term Care Planning means knowing the rules around the transfer of assets, so that you understand what steps you can take to preserve assets without impacting your ability to meet expenses over the next 5 years.
The most important aspect of getting educated about long-term care planning is not to rely on what you hear from friends or read online. Every state implements Medicaid in a different way, and the rules change, so you need the best information you can get in order to put the necessary planning into place.
Long-Term Care Planning means knowing the rules around the transfer of assets, so that you understand what steps you can take to preserve assets without impacting your ability to meet expenses over the next 5 years.
The most important aspect of getting educated about long-term care planning is not to rely on what you hear from friends or read online. Every state implements Medicaid in a different way, and the rules change, so you need the best information you can get in order to put the necessary planning into place.
We are here to help. If you have questions about long term care and want to know more about how you can best plan for your future, please contact Allison Busch at abusch@hdrbb.com or 973.467.1325.
