We all strive to meet the costs of day to day living and to build and protect our wealth for our families. It is a natural extension of that financial management to work with an attorney to create an estate plan and a will or trust which will provide for our heirs, avoid conflict and minimize taxes once we are gone. However, if we need long-term health care later in life, how will we pay for it and nevertheless preserve the wealth we have accumulated for our families?
Long-term custodial health care can be provided at home or in an assisted or skilled nursing facility. All are expensive alternatives costing thousands of dollars a month and none is covered by Medicare. Medicare will only pay for short-term treatment in a skilled nursing facility after an injury or episode of illness, for a period of up to 100 days (with daily copays for days 21 to 100 which can be covered by some Medicare C Plans), but that’s it. After that, you are on your own.
There are three principal ways to pay for long-term health care: (1) long-term care insurance; (2) current income and savings; and (3) Medicaid.
Long-term care insurance can be purchased to cover custodial care costs at home, in an assisted living facility and/or in a nursing home. This insurance can be expensive and is not always affordable. Coverage is often insufficient because inadequate insurance was purchased in order to keep premiums at an affordable level or because inflation has boosted the cost of care beyond the policy benefit.
It is possible to pay for home care or a nursing home stay with current income and accumulated savings, but an individual’s assets will only last for a finite period of care. Self-funding the cost of care will also greatly reduce legacy left to beneficiaries or charity at the time of passing. In addition, paying for the care of one spouse can greatly reduce the quality of life of the healthy spouse.
Medicaid may be the most viable way to pay for long-term care. Many people have the misconception that they would not qualify for benefits under the Medicaid program because it is a “needs based” government program established during President Johnson’s administration to pay for the medical costs of the indigent. As long-term custodial care costs have outpaced the rate of inflation, middle and upper-middle class individuals have looked to the Medicaid program to pay for skyrocketing long-term care expenses. With strategic elder law planning, most people can gain access to long-term care benefits while protecting their income and assets subject to regulatory guidelines.
If you have neither a will nor a trust, or if it has been a while since you last updated your documents, and you would like to plan for your potential long-term care needs, now is the time to meet with your elder law attorney to devise an estate plan. It is essential to tailor a plan suited to your current circumstances and yet flexible enough to provide for future needs.
For an informative guide to aging issues and planning for the future please visit https://www.kblaw.com/wp-content/uploads/2017/10/Elder-Law-QA-Ed18-OnlineEnglish-FINAL.pdf.