“Experience is something you need just before you get it.” In many cases, we learn through our mistakes. Unfortunately, some mistakes are more difficult to overcome. Failing to plan for nursing home costs can be one of those mistakes.
Inconvenient Reality
It is hard to accept you may not be able to handle your day-to-day needs at some point. Of course, you know there are people that need assistance, but it’s hard to believe it could be you. We are self-sufficient most of our lives, and rightly proud of it.
At some point, it is wise to take a step back and think about what the future may hold because the stakes are high.
Long-Term Care Statistics
The United States Department of Health and Human Services (HHS) tells us that 52 percent of seniors will need paid living assistance.
More than one third of them will reside in nursing homes, and long-term care is expensive.
Genworth Financial conducts research each year to keep a finger on the pulse of long-term care costs around the country. They report that the median annual cost for a professional home caregiver in the Oklahoma City area was just under $54,000 in 2020.
For a one bedroom apartment in an assisted living community, the median cost was $46,800. The figure for a private room in a nursing home was $69,350, and a semi-private room was about $7000 less.
According to the HHS, 21 percent of elders that need living assistance require care for between two and five years. 13 percent require paid care for more than five years. In all, the average length of stay in a nursing home is one year.
Medicare and Custodial Care
Since Medicare exists to meet healthcare needs of elders, you may assume that long-term care is covered. Unfortunately, Medicare does not pay for custodial care. Such costs come out of your pocket or other avenues.
Medicaid Eligibility
The widely embraced solution is Medicaid eligibility. It is a need-based program that will pay for long-term care if your countable assets do not exceed $2000.
Your home is not counted, but there is an equity limit of $603,000 and 2021. Home ownership will not preclude you from eligibility, but Medicaid may put a lien on the property after your death if your are in direct possession.
To qualify for Medicaid, you might establish and fund an irrevocable, income-only Medicaid trust. In this type of trust, you transfer the majority of your assets into the trust. You will no longer have access to principal, but you could receive distributions of the trust’s earnings until you apply for Medicaid.
If you need Medicaid to pay for long-term care, the assets in the trust are not “countable” as long the transfers to the trust occur at least five years before you submit your Medicaid application.
Take Action Today!
We can help you position your assets wisely with Medicaid eligibility in mind. When the plan is in place, you can enjoy your golden years with the knowledge that long-term care will not deplete your assets.
If you are ready to get started, you can schedule a consultation at our Oklahoma City elder law office by calling 405-843-6100. There is also a contact form on this site you can use to send us a message.
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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