Elder law lawyers help people prepare for issues that can arise as they age. You may wonder why there are financial-related legalities for seniors to navigate, which is perfectly understandable.
Though elder law attorneys address many issues, asset protection for those entering nursing homes is at the top of the list. Many people assume Medicare will pay for long-term care. This seems to make sense, since the program is designed to address medical issues seniors typically face.
Unfortunately, Medicare does not pay for the custodial care you receive in a nursing home or assisted living facility.
Once you celebrate your 65th birthday, there is a 70 percent likelihood you will require help with your activities of daily living at some point. This is something we all need to take seriously, because it is relevant to all of us.
Nursing Home and Assisted Living Costs
Genworth Financial monitors long-term care costs, conducting in-depth research and even drilling down to individual cities.
In Oklahoma City last year, the median annual cost for a private room in a nursing home was $88,695, and for a semi-private room was $66,613. This is just the average. We have many clients who are paying far more than this on an annual basis.
Assisted living facilities are also expensive. Last year, the median annual cost for a one-bedroom unit was $64,594 or $4800 a month. Many assisted living facilities are more expensive than this, and add additional charges depending on the level of care required.
If you have to pay for several years in an assisted living facility or nursing home, the costs can quickly consume everything you have, leaving you nothing to leave to your loved ones after you pass away.
The Alzheimer’s Association tells us approximately 45 percent of people 85 or older contract the disease. This age group is growing faster than any other, and statistically if you reach 67 you are likely to live into your mid-eighties.
Many people with Alzheimer’s require nursing home care and 35 percent of senior citizens will incur nursing home costs.
The Medicaid Solution
So what can elder law lawyers do for clients concerned about these future long-term care costs.
Medicaid is a government health insurance program jointly administered by the federal and state governments. It will pay for long-term care if you are eligible. The problem is that it is a need-based benefit.
To qualify, there are both income and asset limits that cannot be exceeded. The most you can have in assets, including financial accounts, IRAs, property, etc., is $2000. This excludes certain non-countable assets listed below and your home (but your home is only exempt for the first 12 months unless your spouse continues living in it after you enter long-term care).
Though the home is not a countable asset for the first 12 months or while your spouse lives in it, Medicaid can attach the home after you pass away. This is where the elder law attorney comes in. There are strategies to prevent the government from getting your home.
Other assets that don’t count against the $2,000 limit include your wedding ring, engagement ring, any heirloom jewelry you may have, your household effects and personal belongings, one vehicle (whether single or married), unlimited term life insurance, and $1500 of whole life insurance.
You can reduce the value of your assets to help you qualify for Medicaid to pay for long-term care, but this takes careful advance planning with the help of a knowledgeable elder law attorney. If you do it wrong, you will be penalized and denied Medicaid benefits.
One way to do this is with an irrevocable trust that allows you to receive distributions of earnings. The rules on irrevocable trusts are complex, so the assistance of an elder law attorney is essential.
Attend a Free Educational Event!
Hopefully we have provided you food for thought in this blog. If you would like to learn more, please attend one of our free events. You can see our schedule by visiting our Oklahoma City estate planning events page. Wee urge you to register as soon as possible because seating is limited.